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Income Tax Appellate Tribunal, BENCH “I”,MUMBAI
Before: SHRI D.KARUNAKARA RAO & SHRI PAWAN SINGH
Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. This appeal by assessee u/s 253 of the Income Tax Act (the Act) is directed against the order of ld. CIT(A)-44, Mumbai dated 29.01.2016 for Assessment Year (AY) 2011-12. The assessee has raised the following grounds of appeal:
1. The Ld. C.I.T. Appeals erred in facts and in law in partly allowing appeal of the appellant by making an addition of Rs. 14,77,760/- being @ 8% of the alleged bogus purchase amounting to Rs. 1,84,72,002/-, without considering the submissions made by the appellant on legal grounds as well as on merits, without any base.
2. The above ground of appeal is without prejudice to one another and the appellant craves leave to add, alter, amend, delete or modify any of the above grounds of appeal.
2. Brief facts of the case are that the assessee is an individual and is proprietor of M/s Rudraksha Organics, the assessee is engaged in the business of Chemicals. The assessee filed return of income for relevant AY on 25.09.2011 declaring total income at Rs. 62,56,50/-. The assessment was completed u/s 143(3) on 25.03.2014. While 2 Bhavik Janant Gandhi. framing assessment the Assessing Officer (AO) made the disallowance of Rs.1,84,72,002/- u/s 69C of the Act holding that assessee made the purchases from Hawala/bogus/suspicious dealer. On appeal before the ld. CIT(A), the disallowance was restricted to 8% of the amount of bogus purchases. Accordingly, the additions was work out at Rs. 14,77,760/-. Further aggrieved by the order of ld. CIT(A), the assessee filed the present appeal before us.
3. None appeared on behalf of assessee when case came up for hearing today. The perusal of record shows that notice sent to assessee at the address provided on Form 36, through RPAD return back with the endorsement of postal authority “I.P.”. Despite making repeated calls and waiting for sufficient time, we left no option but to hear the ld DR for revenue and to proceed further on the basis of material available on record. The ld. DR for the Revenue supported the order of ld. CIT(A) and would argue that during the Financial Year (FY) related to the AY under consideration, the assessee made the purchases from dealers who were declared as hawala dealer by Sale-Tax Department, Government of Maharashtra. The AO issued notice to all parties u/s 133(6) of the Act. The notices sent to parties are returned back unserved. The assessee was asked to produce the parties for verification and explained as to why the purchases should not be treated as unexplained expenditure. The assessee failed to produce the parties, thus, the AO made the disallowance of aggregate of the total purchases from all 10 parties. However, on appeal before the ld. CIT(A) the disallowance was restricted to 8% of the impugned purchased on the basis of Gross Profit Net Profit ratio of the assessee.
We have considered the submissions of the ld. DR for the Revenue and perused the material available on record. We have noticed that during the relevant FY, the assessee made the purchases from 10 parties. The details of which along with the cost of purchases are mentioned by AO in para-3 of his order. The AO noticed that assessee made the purchases from the parties who were declared as hawala dealers by Sale-Tax Department, Government of Maharashtra. The assessee was asked to explain as to why the purchases should not be treated as unexplained expenditure u/s 69C of the Act. The assessee filed his reply before the AO and contended that all the payments were made through Account Payee Cheque and the transaction entered with those parties are genuine one. The contention of assessee was not accepted by AO.