KANTABEN CHANDULAL VOHERA,MUMBAI vs. ITO 32(1)(2),

I heard the parties and perused the record. The assessee is engaged in the business of trading in copper sheets, tubes, C.I sheets, S S sheets etc. The AO received information from the sales tax department that some of the dealers were providing accommodation bills without actually supplying the materials. The AO noticed that the assessee has purchased materials to the tune of Rs.31,52,860/- from the parties so identified by the Sales tax department. The AO disallowed the entire amount of purchases and added the same to the income of the assessee. The Ld CIT(A) restricted the addition to 3.36% of the 2 Kantaben Chandulal Vohera above said amount. Still aggrieved, the assessee has filed this appeal before the Tribunal.

I notice that the Ld CIT(A) has granted partial relief to the assessee with the following observations:- “3.4 The appellant is a trader. The AO in his order has dealt exclusively with the purchase of the appellant. However, In the case of a trader, if there are no purchases of material, there cannot be any sales also. As mentioned above, the AO had disallowed a part of purchases without at the same time questioning the sales figure of the assessee. The AO has not brought any material on record to show that there is suppression of sales also by the appellant. The AO has also not rejected the books of accounts. As far as the issue of producing the suppliers before the AO is concerned, the assessee cannot be reasonably expected to force the suppliers to reply to the AO or to appear before the AO.”

The main contention of the assessee is that there is no material available with the AO to come to the conclusion that the impugned purchases are bogus, except the information received from the Sales tax department. The Ld D.R strongly defended the order passed by Ld CIT(A) by submitting that the Ld CIT(A) has been very much reasonable in restricting the addition to 3.5% of the bogus purchases.

Having heard rival contentions, I am of the view that the decision taken by Ld CIT(A) does not call for any interference. In the instant case, the AO has not proved that the impugned purchases have not been sold. As submitted by Ld A.R, an item cannot be sold without purchasing the same. Hence I am of the view that there is no reason to disallow entire amount of purchases. I further notice that the assessee has not furnished books of accounts or other materials to prove the genuineness of purchases. Hence, in the facts and circumstances of the case, I am of the view that the Ld CIT(A) was justified in restricting the 3 Kantaben Chandulal Vohera disallowance to 3.5% of the alleged bogus purchases. Accordingly I uphold the order passed by Ld CIT(A) on this issue.

In the result, the appeal filed by the assessee is dismissed. Order has been pronounced in the Court on 7.6.2017.