KETANKUMAR J PATEL,MUMBAI vs. ASST CIT CIR 2, MUMBAI

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

These are the cross appeals filed by assessee and revenue against the order of CIT(A)-3, Thane dated 30/05/2016 for A.Y.2009-10 in the matter of order passed u/s.143(3) r.w.s. 147 of the IT Act, 1961. 2. The following grounds have been taken by the assessee:-

4468/Mum/2016 Shri Ketankumar J Patel a) The Ld. CIT(A) has erred in directing the A.O. to make adhoc addition of 20% as inflated purchases amounting to Rs. 29,33,289/- (being 20% of Rs. 1,46,66,445/-), from the below stated parties and treating the same as not genuine purchase of materials, which were used in the fabrication of equipment's supplied to the customers of appellant and treating the same as Bogus Purchases, on the basis of inference and assumptions and the same is not based on any adverse evidence or detection of accounting entries in the books of accounts of the Appellant. Name of Supplier Purchases Disallowed Amount (Rs) M/s. Navratan Metal Impex Rs. 1,15,65,4447- M/s. Pooja Steel & Alloys Rs. 30,18,9337- M/s. Alankar Steels Rs. 82,0687- Total Rs. 1,46,66,4457- b) The Ld. CIT(A) has erred in directing the A.O. to disallow and to make the addition towards the inflated purchases amounting to Rs.29,33,2897-(being 20% of Rs. 1,46,66,4457-), disregarding completely the fact that the equipment fabricated out of the purchase of material from M/s. Navratan Metal Impex, M/s. Pooja Steel & Alloys and M/s. Alankar Steels at the manufacturing unit of the appellant is liable to excise duty and the captioned equipment fabricated at the factory of the appellant was delivered to the customer only after payment of excise duty and the same is recorded in statutory, excise and other records maintained by the appellant. The Ld. A.O. Ought to have given an opportunity to the appellant before charging interest u/s. 234B of Rs. 34,24,392/- and u/s 234C of Rs. 10,0247-. The Appellant craves leave to add, alter, or modify the grounds of appeal, as stated above, at any time on or before the hearing of appeal.

3. The grounds taken by Revenue are as under:-

1. 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-3, Thane erred in deleting the addition of Rs. 1,17,33,156/- out of the total addition of Rs. 1,46,66,4457- made on account of bogus 4468/Mum/2016 Shri Ketankumar J Patel purchases, despite holding that the purchases were not genuine and the assessee failed to prove genuineness of the transactions.

2. On the facts and in the circumstances of the case and in law, Ld. CIT(A)-3. Thane erred in deleting the above addition despite the fact that the assessee failed to discharge his onus of proving the purchases.

3. The appellant prays that the order of the Ld. CIT(A)-3, Thane, may be set-aside and that of the Assessing Officer be restored.

4. The appellant craves leave to add, amend or alter any ground/grounds, which may be necessary.

4. The facts in brief are that the assessee is a proprietor of M/s. Unique Chemoplant Equipments, which is engaged in the business of fabrication of various equipments for chemical, pharmaceutical and allied industries. The case was reopened as the parties namely; M/s. Pooja Steel & Alloys, M/s. Aiankar Steels and M/s. Navratan Metal Impex from whom the assessee had made purchases are involved in providing hawala entries. The AO made an addition of Rs.1,46,66,445/- on account of bogus purchases as the assessee failed to discharge its primary onus of producing the respective parties and proving the genuineness of the purchase transaction. .The AO added entire purchase in assessee’s income.

5. By the impugned order the Ld. CIT(A) upheld addition to the extent of 20% of bogus purchases.

6. Rival contentions have been heard and record perused. From the record, we found that assessee is engaged in the business of fabrication of various equipments for chemical, pharmaceutical and allied industries. On the basis of information from Sales Tax Department, AO reopened the