EMPEEF CHEMICALS P.LTD,MUMBAI vs. ITO 12(2)(2), MUMBAI

Although the assessee has raised multiple Grounds of appeal, but the solitary dispute is with regard to the purchases of Rs.19,12,778/-, which had been held by the income-tax authorities to be bogus.

Briefly put, the relevant facts are that the assessee is in the business of manufacture of fertilizers, chemicals, paints, etc., and in the course of assessment proceedings, the Assessing Officer noted that assessee had purchased goods from four concerns whose names appeared in the list of hawala dealers prepared by the Sales Tax Department meaning that such parties were not actually carrying out the business of purchase or sale of goods, but were merely providing accommodation entries/bills. Noticing the failure of the assessee to establish the genuineness of the parties, and noticing the absence of any proof of transportation of goods, the entire purchases of Rs.19,12,778/- was considered as unexplained and added to the returned income in terms of Sec. 69C of the Act. The CIT(A) has, in- principle, affirmed the decision of the Assessing Officer, but restricted the addition to 30% of the amount of purchases, which came to Rs.5,73,834/- following, inter-alia, the ratio of the judgment of Hon'ble Gujarat High Court in the case of Simit P. Sheth, 356 ITR 451 (Gujarat). Not being satisfied with the order of the CIT(A), assessee is in further appeal before the Tribunal.

At the time of hearing, the learned representative for the assessee referred to the decision of the Tribunal in dated 30.06.2017 in assessee’s own case for Assessment Year 2009-10, wherein in a similar situation, the addition with regard to unexplained purchases has been restricted to 10% of such unexplained purchases. Following the said precedent, which has been rendered under identical circumstances, I find no reason to distract from the precedent in assessee’s own case dated 30.06.2017 (supra). Accordingly, the order of CIT(A) is set-aside and the M/s. Empeef Chemicals Pvt. Ltd.

In the result, appeal of the assessee is partly allowed, as above.