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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal of the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-3, Mumbai [in short CIT(A)], in Appeal No. 42/16-17/NSK (old 751/15-16/THN) vide order dated 27.01.2017. The Assessment was framed by the Income Tax Officer, Ward 1(1), Thane (in short ‘ITO/ AO’) for the A.Y. 2011-12 vide order 2 dated 23.03.2015 under section 144 read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance made by AO off non-genuine and bogus purchases.
Briefly stated facts are that the assessee is engaged in the business of manufacturing and trading of engineering goods. The AO received information from DGIT (Investigation), who in turn received information from Sales Tax Department, Mumbai that the assessee has made purchases from hawala parties, as listed in hawala dealers by the Maharashtra Sales Tax Department who are providing bogus bills of purchase amounting to Rs.26,56,827/- as admitted by these hawala dealers in their deposition before the authorities. The same reads as under: - Name Amount Payal Enterprises 7,896 Sheetal Trading Co 12,987 Macos Iron and Steel 150316 Pvt. Ltd. Ceeport Iron and steel 302164 Pvt ltd. Khodiyar Enterprises 304010 Deep Enterprises 796010 Purav Enterprises 1083444 Total 26,56,827 4. During the course of assessment proceedings and during appellate proceedings, the assessee submitted documentary evidences such as payment received against such sales, receipt of material purchases, account payee cheque. According to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition of the whole amount of unproved purchase to the returned income of the assessee. Aggrieved, assessee preferred the appeal 3 before CIT(A), who confirmed the action of the AO by observing in para 8.1 by observing as under:
8.1 It is observed from the assessment order that the assessee case of the assessee is one of such cases. The AO asked the assessee to prove the genuineness of these purchases. The assessee neither compiled to the notices issued by the Assessing Officer nor to the final show cause notice issued by him. Even during appellate proceedings, despite repeated opportunities, did not furnish the basic details like copies of the Bills, Bank account, the Ledger account. For proving genuineness of these purchases, the appellant is not only required to submit these details but also substantiate with quantitative details of the goods purchase that the same goods were sold. The assessee neither co-related purchases and sales, nor produced proof for movement of goods, nor produced proof of payment to impugned purchases parties. In such circumstances, in my considered view that addition made by the Assessing Officer of ₹ 26,56,827/- as bogus purchases is in order and is upheld.