ITO , WARD- 3 (3), KALYAN vs. NIMESH S. DESAI, MUMBAI

ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the Revenue. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-1, Thane [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) r.w.s 147 of the Income Tax Act 1961, (the ‘Act’). 2. The grounds of appeal filed by the Revenue read as under:

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in not appreciating the law correctly that once the

2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law by not appreciating the fact that the assessee could not establish the genuineness of the purchases from the non-existent vendors? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law by not appreciating the fact that the onus to justify the claim of expenses is on the assessee and the same has failed to discharge it in relation to the purchases made from the non-existent vendors? 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law by ignoring the fact that the assessee could not substantiate its claim of purchases from non-existent vendors by means of relevant supporting documents related to movement and delivery of goods, stock register, etc. to arrive at disallowance at 25% of the purchases from the non-exigent vendors? 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in not appreciating the law correctly that once the purchases are unverifiable/not genuine / bogus, the same should have been disallowed in entirety, particularly in view of the ratio of the decision of the Hon'ble Gujarat High Court in Tax Appeal No. 242 of 2003 dated 20/06/2016 in the case of N K. Proteins Ltd. against which the SLP was dismissed by the Hon'ble Apex Court and also decision of Hon'ble Supreme Court in case of Kanchwala Gems V/s JCIT 288 ITR 10 (SC)? 3. Briefly stated, the facts of the case are that the assessee filed his return of income for the assessment year (AY) 2009-10 on 27.09.2009 declaring total income of Rs.1,71,280/-. The assessee is a trader and supplier of all types of engineering goods, hardware items, cables, pipe fittings, valve etc. On receipt of information from the Sales Tax Department, Government of Maharashtra Shri Nimesh S Desai Rs.6,10,365/- from nine parties, the Assessing Officer (AO) issued notice u/s 148 dated 05.04.2013 to re-open the assessment. In response to it, the assessee submitted that the original return of income filed on 27.09.2009 be treated as return filed in response to notice u/s 148 of the Act. During the course of re-assessment proceedings, the AO asked the assessee to submit copies of bills, transportation and octroi payment receipts in respect of transaction made with the above parties during the year under consideration. In response to it, the assessee filed copies of bills of purchases from those parties, but stated that there was no transport or octroi bills as the purchasers and sellers are local and as such there are no transport and octroi charges, the same was hand delivered. The AO observed that the inquiry conducted by the Inspector of Income Tax indicated that the said parties were not there in the address given. Therefore, the AO was not convinced with the above explanation of the assessee and made an addition of the total amount of Rs.6,10,365/-.