Wasi Ahmed Ali Ahmed Khan, Thane vs ACIT | ITAT Mumbai 2017

Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM

For Appellant: Shri Dhirendra M. Shah

For Respondent: Ms. Beena Santosh

Hearing: 18/04/2017Pronounced: 20/04/2017

आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A)- 2, Thane, dated 29/08/2016 in the matter of order passed u/s. 143(3) of the IT Act. 2. In this appeal, assessee is aggrieved for addition of Rs.15,72,829/- made on account of sundry creditors as unexplained. Assessee is also aggrieved for upholding disallowance of 10% on adhoc basis in respect of direct and indirect expenditure. 3. Rival contentions have been heard and record perused.

Wasi Ahmed Ali Ahmed Khan 4. Facts in brief are that assessee is proprietor of M/s Industrial Equipments, engaged in the business of manufacturing of inter coolers, conical mixer, per heater, ribbon blender, feeding conveyor, Nauta dryer and similar industrial equipments. The return of income, declaring total income at 16,74,090/-, was filed on 29.09.2012 and the same was processed U/S 143(1) of the Act. Subsequently, the case was selected for scrutiny and accordingly the statutory notices u/s 143(2) / 142(1) of the Act, along with detailed questionnaire, were issued and duly served upon the assessee. In compliance, the Ld AR attended the proceedings and furnished the requisite details. The AO after considering the submission made by the Ld AR, finalized the assessment order u/s 143(3) of the Act, on 13.03.2015, at total income of Rs 42,49,920/-, after making addition of Rs.15,92,465/-, on account of unexplained sundry creditors and, Rs.9,83,360/-, on account of disallowance out of direct and indirect expenses.

By the impugned order CIT(A) confirmed the addition to the extent of Rs.15,72,829/- on account of creditors in respect of following parties. (i) Bharat Textiles Rs. 3,150/- (ii) Harsh Enterprise Rs. 3,51,897/- (iii) Ambuja Metal Rs.11,71,932/- Corporation (iv) Allied Weld Industries Rs. 45,850/- Total Rs. Rs.15,72,829/- Wasi Ahmed Ali Ahmed Khan 6. I have considered rival contentions and found from record that an amount of Rs.3,150/- was paid in cash to M/s. Bharat Textiles Waste on 01/04/2012. There was proper entry in the books of accounts, accordingly, there is justification for the addition of Rs.3,150/- so made by the AO.

In respect of Ambuja Metal Corporation, I found that payment was not made to the party because there was claim for defective supply, therefore, out of total payment of Rs.15,25,545/- only an amount of Rs.3,53,613/- was paid on 09/01/2012 through account payee cheque.

Similarly on account of claim of defective supply, payment of Rs.45,850/- was not made to M/s. Allied Weld Industries, the assessee has filed confirmation of the party. This amount was adjusted against labour bills. This client is vendor cum customer of the assessee in so far as purchases are made and used in product sold to him. It appears that lower authorities have not properly appreciated the documents to reply filed in respect of Harsh Enterprises, Ambuja Metal Corporation and Allied Weld Industries. In the interest of justice, I restore the addition made in respect of these parties to the file of the AO for deciding afresh as per law.

Assessee is also aggrieved for confirming adhoc disallowance of 10% in respect of direct and indirect expenditure. Learned AR has drawn our attention to the finding of CIT(A) to the effect that assessee has not maintained verifiable vouchers / bills only in respect of petty expenses. As

WASI AHMED ALI AHMED KHAN,THANE vs. ACIT CIR. 3, THANE, THANE