SUCHITA PACAKAGING P. LTD,MUMBAI vs. ITO WD 8(2)(4), MUMBAI

Solitary issue urged by the assessee relates to disallowance of purchases to the tune of ` 2,57,002/- treating the same as tax bogus in nature.

I have heard the parties and perused the record. The assessee is engaged in the business of manufacturing packaging materials. The Revenue received information from the Sales Tax Department that certain dealers are engaged in providing bogus accommodation bills to the parties without actually supplying the materials. It was noticed that the assessee has made purchases from following parties who have been declared as Hawala dealers :- (a) M/s. Suraj Timber mart ` 27,402/- (b) M/s. Shyam Traders ` 2,29,600/- ` 2,57,002/-

Since the assessee did not furnish evidence such as delivery challans, stock register, payment details, lorry receipts, octroi payment etc., the Assessing Officer disallowed the purchases stated above by invoking provisions of section 69C of the Act. It is pertinent to note that the assessee had declared loss from the business to the tune of ` 28,26,894/- in the return of income filed by it. The Assessing Officer, without reducing the loss by the amount of disallowance made by him, assessed the disallowance of ` 2,57,002/- as total income of the assessee. The learned CIT(A) also confirmed the same and hence the assessee has filed this appeal before the Tribunal.

I have heard the parties and perused the record. Without going into the merits of the additions, I noticed that the Assessing Officer has not given any justification for not reducing the disallowance of purchases from the loss declared by the assessee. Learned Departmental Representative also could not give any convincing explanation for the same. It is well settled proposition that right available to the assessee cannot be taken away by the Assessing Officer according to his whims and fancies. The assessee has declared loss of ` 28,26,894/- from the business carried on by him. The disallowance of purchases made by the Assessing Officer relates to the very same business only. Hence, in all fairness, the disallowed amount should have gone to reduce the loss declared by the assessee. When this aspect was pointed out by learned AR, he submitted that the assessee, without prejudice his right to contest the disallowance, would be satisfied, if disallowed amount is reduced from the loss. The Ld A.R further submitted that an assessee, who is already incurring losses, would not be benefitted by obtaining alleged bogus purchase bills.

Accordingly, I set aside the order passed by the learned CIT(A) and direct the Assessing Officer to reduce the amount of impugned disallowance from the loss declared by the assessee and accordingly compute the total loss of the assessee.

Other grounds urged by the assessee are not adjudicated in view of the directions given by me above.

In the result, appeal filed by the assessee is treated as allowed.