INCOME TAX OFFICER 19(3)(1), MUMBAI vs. RAJESH MAUBHAI CHAUHAN, MUMBAI

None appeared on behalf of the assessee. However a letter was moved by the assessee seeking adjournment on the plea that he has not appointed a counsel till date. I am not convinced with the reasoning given by the assessee for seeking adjournment and accordingly I reject the same. Accordingly I proceed to dispose of the appeal ex-parte, without the presence of the assessee.

I heard the Ld D.R and perused the record. The assessee is a manufacturer of light pole accessories. Consequent to the information received from the Sales tax department, it came to the notice of the revenue that the assessee has made purchases to the tune of Rs.37,97,715/- during the year under 2 Shri Rajesh Manubhai Chauhan consideration from the parties, who were listed out by the Sales tax department as hawala dealers, i.e., they have provided only accommodation bills without actually supplying the material. During the course of assessment proceedings, the AO issued notices u/s 133(6) of the Act, but they were returned back un- served. Hence the AO asked the assessee to produce the suppliers, but the assessee failed. The assessee also could not reconcile the purchases with the consumption/sales. Hence the AO treated the above said purchases as bogus in nature. Since the assessee did not produce stock register, he disallowed entire amount of alleged bogus purchases.

I notice that the assessee has not maintained stock register and hence he could not establish that the materials were actually consumed by him. I notice that the Ld CIT(A) has estimated the profit on the reasoning that the AO has not brought on record any material to show that there was suppression of sales. However, on reading of assessment order, I notice that the AO has made it very clear that it is the responsibility of the assessee to show that the materials covered by the alleged accommodation bills were either consumed or sold. Since there was failure on the part of the assessee, the AO was constrained to disallow entire purchases. I notice that the Ld CIT(A) has failed to appreciate the same and before him the assessee has failed to produce any material to prove consumption/sales. Under these set of facts, I am of the view that this issue requires reconsideration at the end of Ld CIT(A) so that one more opportunity may be given to the assessee, in the interest of natural justice. Accordingly I set aside the order passed by Ld CIT(A) on this issue and restore the same to his file with the direction to examine it afresh and take appropriate

In the result, the appeal of the revenue is treated as allowed for statistical purposes. Order has been pronounced in the Court on 22.2.2018.