ACIT- 26 (2), MUMBAI vs. PRADIP AMRATLAL THAKKAR, MUMBAI

Dispute in the present appeal is confined to the decision of learned Commissioner (Appeals) in reducing the disallowance to 25% of the non–genuine purchase.

Brief facts are, the assessee, an individual, is engaged in the business of manufacture and sale of resins. For the assessment year under dispute, the assessee filed his return of income on 28th September 2011, declaring total income of ` 83,74,153. Initially, the return of income was processed under section 143(1) of the Income Tax Act, 1961 (for short "the Act"). Subsequently, on the basis of information received from the DGIT (Inv.), Mumbai, and the Sales Tax Department, Government of Maharashtra, that purchases worth ` 2,11,916, claimed to have been made by the assessee from Nishil Trading Co. during the year under consideration is non–genuine as the concerned selling dealer has been identified as a hawala operator providing accommodation bills, the Assessing Officer re–opened the assessment under section 147 of the Act. In course of assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases. Further, he also issued notice under section 133(6) of the Act to the selling dealers seeking information on the purchases shown by the assessee. Alleging that the assessee was unable to prove the genuineness of purchases, the Assessing Officer treated the purchase of ` 2,11,916, as bogus and added back to the 3 Pradip Amritlal Thakkar income of the assessee. Challenging the aforesaid addition, the assessee preferred appeal before the first appellate authority.

We have heard the parties and perused material available on record. Though, it may be a fact that the assessee was unable to prove the purchases made from the declared source through clinching evidences, however, learned Commissioner (Appeals) has recorded a categorical finding of fact that the assessee had furnished statement of stock purchased and consumed, quantitative statement of finished products, sales effected and the fact that all these transactions have not only been recorded in the books of account but reflected in the audited financial statements. Nothing adverse has been found either in the books of account or the financial statements. The doubt is only with regard to the source of purchases. Thus, in such situation the presumption would be, the assessee might have purchased the goods from the grey market and to regularize such transactions has availed accommodation bills. In these circumstances, only the profit element embedded in such unproved purchases can be considered for addition. Therefore, the decision of learned Commissioner (Appeals) to restrict the disallowance to 25% of the non–genuine purchases, in our considered opinion, is more than reasonable and meets the ends of justice. Accordingly, we uphold the decision of learned Commissioner (Appeals) on this issue. Ground is dismissed.

In the result, appeal stands dismissed. Order pronounced in the open Court on 30.12.2019