ACIT - 26(1), MUMBAI vs. FARHANA NISAR SIDDIQUI, MUMBAI

The assessment for impugned AY was framed by Ld. Assistant Commissioner of Income Tax-26(1), Mumbai [AO] u/s 144 read with section 147 of the Income Tax Act,1961 on 28/01/2016 wherein the assessee has been saddled with certain additions, out of which following additions are the subject matter of dispute before us:- No. Nature of Addition Amount (Rs.) 1. Disallowance of Bogus Purchases 46,68,492/- 2. Disallowance out of conveyance expenses, 32,37,895/- Telephone Expenses, Staff Welfare & Other Expenses The addition of bogus purchases was made since the assessee failed to substantiate the purchases made from five dealers, the details of which have already been extracted in the quantum assessment order. The disallowance against expenses claimed by the assessee is adhoc disallowance of 30% for want of satisfactory details / documentary evidences.

The Ld. CIT(A), relying upon the decision of Hon’ble Gujarat High Court in CIT Vs. Bholanath Poly Fab Pvt Ltd. 355 ITR 290 estimated the addition against alleged bogus purchases @ 12.5%. The adhoc disallowance as estimated by Ld.AO was reduced to 10% of cash expenses of Rs.37.27 Lacs as claimed by the assessee. Aggrieved, the revenue is in further appeal before us. The Ld. DR has supported the stand taken by Ld. AO.