DEEPAK C. BAJAJ,MUMBAI vs. ITO 2(1) KALYAN, KALYAN

The present appeal has been filed by the assessee against order dated 04/01/2016 passed by the Ld. Commissioner of Income Tax (Appeals)-3, Thane, pertaining to the assessment year 2010-11, whereby the Ld. CIT (A) has partly allowed the appeal filed by the assessee against assessment order dated 30/10/2014 passed u/s 143 (3) r/w section 147 of the Income Tax Act, 1961 (for short ‘the Act’).

Brief facts of the case are that the assessee a proprietary concern, M/s DNR Corporation, engaged in the business of trading in lubricating oil and Grease, filed its return of income for the assessment year 2010-11 declaring the total income of Rs. 5,43,791/-. The same was processed u/s 143 (1). Subsequently, the revenue received the information from the Sales Tax Department, Maharashtra that certain dealers had provided accommodation bills to different purchasers including the assessee in this case without actually supplying goods. On verification, it came to the notice that assessee had purchased goods from the said dealers to the tune of Rs. 70,66,771/- during the financial year relevant to the assessment year 2010-11. Accordingly, the AO issued notice u/s 148 after recording reasons. In response thereof the assessee requested to treat the original return of income as the return of income filed in response to notice u/s 148. Thereafter, the AO issued notice us/ 143 (2) a notice u/s 142 (1) along with questionnaire. The assessee furnished copies of bills and payments details. Since, the assessee had not maintained stock register and failed to produce transport challans, notices u/s 143 (6) were issued to the parties concerned, however, the notices were received back un-served. The Ward Inspector also could not locate the parties. Accordingly, the AO disallowed the entire amount of purchase and added the same to the income of the assessee. In first appeal, the Ld. CIT (A) restricted the disallowance to 25% of the purchases made from the hawala dealers holding that there cannot be sale without any purchase.

Still aggrieved, the assessee has challenged the impugned order on the following effective ground:-.

At the outset, the Ld. counsel for the assessee submitted that the assessee’s case is covered by the decision of ITAT, Mumbai rendered in assesse’s own case for the A.Y. 2009-10 and 2011-12 and the Tribunal has restricted the addition to the extent of 12.5%. The Ld. counsel further submitted that the present appeal may be decided accordingly.

On the other hand, the Ld. Departmental Representative (DR) relying on the findings of the Ld. CIT (A) submitted that the impugned order does not warrant any interference as the disallowance of 25% is reasonable in the light of the facts of the case and the evidence on record.

We have heard the rival submissions and also perused the material on record. We find that the SMC Bench of the Mumbai Tribunal has restricted the addition to the extent of 12.5% of the alleged bogus purchases, in assessee’s own appeals, (A.Y. 2009-10 ) and ITA No. 284/Mum/ 2017 (A.Y. 2011-12). The operative part of the order reads as under:-