ASHOK MEHTA HUF,MUMBAI vs. ITO 22(1)(2), MUMBAI

The facts relating to the case are discussed in brief. The assessee is engaged in the business of trading in chemicals and solvents. Consequent to the information received from the Sales tax department that certain parties are engaged in the business of providing accommodation bills without actually supplying the materials and upon noticing that the assessee has purchased goods from some of such parties in the year under consideration, the AO reopened the assessment of this year by issuing notice u/s 148 of the Act. Since, the assessee could correlate the purchases with sales, the assessing officer added 12.50% of the value of purchases made from the suspicious dealers as profit element embedded in such purchases. The Ld CIT(A) also confirmed the same and still aggrieved, the assessee has filed this appeal.

The Ld A.R submitted that the assessing officer has made the impugned addition u/s69C of the Act, which is not legally correct as the assessee has duly accounted for the impugned purchases. He submitted that the goods purchased from these parties have been sold, meaning thereby, the purchases cannot be in doubt. He submitted that the division bench of ITAT, under identical set of facts, has sustained an addition of 2% of the value of purchases only.

On the contrary, the Ld D.R placed reliance on the decision rendered by Hon’ble Supreme Court in the case of N.K.Proteins (Civil Appeal No.769/2017) and submitted that the entire amount of purchases could be disallowed, but the AO has disallowed only 12.50%.

I have heard rival contentions and perused the record. In my view the decision rendered in the case of N.K.Proteins (supra) by Hon’ble Supreme Court is not applicable, since the said decision was rendered on the basis of facts available in that case. I have gone through the facts available in the case of N.K.Proteins Ltd (supra) and notice that, in that case, the revenue conducted search in the hands of that assessee and found the blank signed cheque books and vouchers of number of concerns at its premises. This fact, in my view, shows that the assessee before the Hon’ble Supreme Court was operating all the accounts of the concerns, which factor established bogus nature of the purchases. In any case, the issue agitated before me would depend upon the facts prevailing in each case and hence the assessee also, in my view, cannot take support of the decision rendered in other cases. I also notice that the AO has not made addition u/s 69C of the Act and hence I reject the contentions of the Ld A.R urged in that connection.

There is no dispute with regard to the fact that the assessee has maintained stock register and has proved that the purchased goods have been sold. Hence

In the result, the appeal of the assessee is dismissed. Order has been pronounced in the Court on 20.9.2017.