AARAV FRAGRANCES AND FLAVORS P.LTD,THANE vs. ACIT CIR 1, THANE

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ITA 2053/MUM/2017Status: DisposedITAT Mumbai30 August 2018AY 2010-114 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the difference was not an unexplained expenditure but a payment made by the assessee, supported by documentation. The Tribunal concluded that the supplier showing lesser sales did not alter the genuineness of the transactions, attributing the difference to timing or recording variations.

What were the facts?

The assessee, engaged in manufacturing fragrance compounds, faced an addition of Rs. 3,64,316 under Section 69C for the difference between purchases shown in its books and amounts confirmed by suppliers. The assessee had recorded discounting charges which the AO treated as unexplained expenditure.

What were the issues?

Whether the difference in purchase amounts between the assessee and suppliers, treated as discounting charges, constitutes unexplained expenditure under Section 69C. Whether the genuineness of transactions is affected by discrepancies in recording by parties.

Which sections of the Income-tax Act were involved?

Section 69C,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A ”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM

For Appellant: Shri K.K. Lalkaka
For Respondent: Shri Chaitanya Anjaria
Hearing: 28/08/2018Pronounced: 30/08/2018

आदेश / O R D E R PER R.C.SHARMA (A.M):

This is an appeal filed by the assessee against the order of CIT(A)- 1, Thane dated 28/12/2016 for A.Y.2010-11 in the matter of order passed u/s.143(3) of the Income Tax Act, 1961. 2. The only grievance of assessee relates to addition of Rs.3,65,362/- u/s.69C of the IT Act. 3. Rival contentions have been heard and record perused.

M/s. Aarav Fragrance & Flavors Pvt. Ltd., 4. Facts in brief are that assessee is engaged in manufacturing of fragrance compounds. During the assessment proceedings U/s 143(3) of the Act Learned AO issued Notices U/s 133(6) of the Act to various suppliers. Out of this, learned AO has made disallowance U/s 69C of the Act amounting to Rs. 4,61,559/- being positive differences i.e. assessee company showing more purchases than confirmed by the suppliers The disallowances are as follows:- Sr.No. Name of the Party Amount as per Amount as per Reply Difference (In Rs.) Assessee received from the supplier (In Rs.) Company (InRs.)

01 50,66,641/- 49,69,421 97,220/- Associate Allied Chemicals(l ndia) Pvt.Ltd.

02 25,64,0707- 21,99,7347- 3,64,336/- Rishichem Distributors Pvt.Ltd. 03 Gopal Enterprises 16,22,3537- 16,22,3527- 1/- Total 4,61,559/-

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