M/S.SHREE ENGINEERING WORKS,MUMBAI vs. ITO WARD 3(3), MUMBAI

The dispute in the present appeal is confined to the addition of ` 2,14,874, on account of non–genuine purchases.

Brief facts are, the assessee is a partnership firm engaged in the business of manufacturing and trading in chemicals. For the assessment year under dispute, the assessee filed its return of income on 30th September 2010, declaring total income of ` 21,350. The return of income filed by the assessee was initially 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 the assessee is a beneficiary of accommodation bills provided by certain parties, the Assessing Officer re–opened the assessment under section 147 of the Act. During the assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of the purchases of `.2,14,874 claimed to have been made from two parties. Further, to independently verify the genuineness of such purchases, the Assessing Officer also issued notice under section 133(6) of the Act. However, nothing substantial came out from such enquiry as the concerned parties were not found in the given address. The assessee also could not convince the Assessing Officer through proper supporting documentary evidence to prove the genuineness of purchases. In view of the aforesaid, the Assessing Officer treated the purchases of ` 2,14,874, as bogus and added back to the income of the assessee under section 69C of the 3 Shree Enrgineering Works Act. Being aggrieved with the said addition, the assessee preferred appeal before the first appellate authority.

During the appellate proceedings, the assessee was again called upon to prove the genuineness of purchases. In this context, learned Commissioner (Appeals) raised specific queries to the assessee and called upon it to furnish various details to prove the purchase. However, as alleged by learned Commissioner (Appeals), the assessee failed to furnish the details called for except furnishing copies of purchase bills, bank statement, Balance Sheet, Profit & Loss Account, etc. Being of the view that the assessee has failed to prove the genuineness of purchases, learned Commissioner (Appeals) not only upheld the decision of the Assessing Officer in rejecting the Books of Account but also confirmed the addition made by him.

The learned Authorised Representative submitted, the assessee apart from being a manufacturer also undertakes job works. He submitted, without effecting the purchases the assessee could not have sold the goods. Therefore, entire purchases made by the assessee could not have been disallowed. He submitted, the addition at best can be restricted to the gross profit rate of 13% shown by the assessee.

I have considered rival submissions and perused material on record. Undisputedly, the assessee was unable to prove the genuineness of purchases made worth ` 2,14,874, by furnishing any cogent evidence. In fact, in the course of appellate proceedings, learned Commissioner (Appeals) had given one more opportunity to the assessee to prove the purchases by furnishing evidence including quantitative details of purchase, consumption, sales, on party wise, month wise basis. However, it is evident, except furnishing copies of purchase bills, bank statement, Balance Sheet, Profit & Loss Account, etc., the assessee has not furnished any other details before learned Commissioner (Appeals). No delivery challan or transportation bills were furnished to prove the actual delivery of goods. Even, on a query from the Bench, the learned Authorised Representative submitted that the assessee does not maintain any stock register. Further, no quantitative details of purchase, consumption and sales were furnished either before the Departmental Authorities or even before this forum. In such circumstances, the assessee’s claim that it had purchased the goods from the concerned parties cannot be accepted. Further, absence of quantitative details of purchase, consumption and sale

In the result, assessee’s appeal is dismissed. Order pronounced in the open Court on 25.09.2019