VAISHALI PHARMA PVT. LTD.,MUMBAI vs. DCIT - 13(3)(2), MUMBAI

During hearing of this appeal, Miss. Keyuri Desai, ld. counsel for the assessee, contended that while coming to a particular conclusion, the Ld. Commissioner of Income Tax (Appeal) did not appreciate the fact that the purchases cannot be termed as bogus because the supplier was listed as Hawala Dealers by the VAT Authorities and further the assessee has no powers to catch them and to produce before the Assessing Officer for cross examination or confirmation. It was also asserted that the ld. Assessing Officer has same powers which are vested in court under the code of civil procedure 1908 enforcing the attendance of any person as per section 131 of the Act. Alternatively, it was contended that the adoption of disallowance at the rate of 12.5% is highly excessive. On the other hand, Miss. Anupama Singla, ld. DR, defended the addition by supporting the impugned order.

2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee declared income of Rs.32,55,720/- in its return filed on 29/09/2009, which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter the Act) on 09/02/2011. Subsequently, the case of the assessee was selected for scrutiny and order u/s 143(3) of the Act was passed on 30/11/2011 assessing the total income at Rs.36,41,630/-, While doing so, on the basis of information received, the name of M/s Vaishali Pharma P. Ltd., from whom the assessee made transactions, was found to be indulged in Hawala Transactions by issuing bogus purchases, bills, without actual delivery of goods or material. As per the Department, the assessee claimed excess expenses of Rs.500656/-on the basis of bogus bills by showing the purchases from these two parties namely Ajanta Enterprises and Daksha Enterprises. During Assessment proceedings, the assessee was asked to submit the details of transaction entered into with these parties. These parties, as per the Revenue, were not traceable, therefore, the Ld. Assessing Officer deemed it fit to disallow 12.5% of the value of transaction entered into with the aforesaid parties, which comes to Rs.62,582/- (12.5% of Rs.5,00,656/-) and added to the income of the assessee.