MIHIR OVERSEAS,MUMBAI vs. ITO 24(1)(4), MUMBAI

We heard Ld D.R and perused the record. The assessee is a manufacturer cum trader of paper stickers and other packing materials. 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.51,20,538/- during the year under consideration from the parties, who were listed out by the Sales tax department as hawala dealers, i.e., they provided only accommodation bills without actually supplying the material. The AO issued notices u/s 133(6) of the Act to the suppliers, but they were returned back un-served. The assessee also could not produce

6809/M/16 M/s. Mihir Overseas parties before the AO. Hence the AO treated the above said amount of Rs.51,20,538/- as bogus purchases and disallowed the same.

Before Ld CIT(A), the assessee furnished quantity details and other evidences available with him. The Ld CIT(A) noticed that the assessee could not prove the transport of materials. Accordingly, the Ld CIT(A) took the view that the addition of entire amount of purchases is not justified, since the assessee has reconciled purchases with sales. Accordingly, by taking cue from the decision rendered by Hon’ble Gujarat High Court in the cases of Vijay Proteins Ltd (2015)(58 taxmann.com 44) and CIT Vs. Simit P Sheth (2013)(356 ITR 451), the Ld CIT(A) that a portion of purchases may be sustained. Accordingly the Ld CIT(A) sustained addition to the extent of 30% of value of purchases, which worked out to Rs.15,36,161/-. Still aggrieved, the assessee has filed this appeal.

The Ld D.R strongly contended that the order of Ld CIT(A) does not call for any interference, since the first appellate authority has taken reasonable view of the matter.