RUSHI HOUSECON P. LTD,MUMBAI vs. DCIT 9(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM (A.Y:2010-11) M/s Rushi Housecon P. Ltd Vs. Dy. Commissioner Income Tax C/o Bharat K. Patel & Co. 402, 9(3), Aaykar Bhavan, New Rishikesh Apt. Opp. N.L. High School, Marine Lines, M.K. Road, S.V. Road, Malad (West) Mumbai-400020 Mumbai-400020 PAN:AABCR8701K Appellant .. Respondent Assessee by .. None .. Revenue by Shri B.S. Bist, DR Date of hearing .. 15-11-2016 .. Date of pronouncement 15-11-2016 O R D E R PER MAHAVIR SINGH, JM:

This appeal by the assessee is arising out of the order of CIT (A)-20, Mumbai in appeal No. CIT (A)20/DCIT-9(3)/IT-33/2013-14 dated 17-09-2014. The Assessment was framed by DCIT-9(3), Mumbai for the A.Y. 2010-11 vide order dated 08-03-2013 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

1. Additions on account of Bogus Purchases Rs.8,70,345/- from M/s Manibhadra Trading Co.”. We have heard learned Senior DR and gone through the facts and 3. circumstances of the case. We find that the assessee has shown purchases from M/s Manibhadra Trading Co. amount to Rs.8,70,345/-. According to AO, the above stated party is involved in Hawala entry operation, providing bills of sales and purchases without actual transactions. This information was provided by Sale Tax Department, Govt. of Maharashtra to DGIT (Inv) Mumbai. The assessee stated before AO that complete details of purchases, sales and payments by account payee cheque are made to the parties. Once these facts are not disputed that the assessee has recorded the purchase in the books of accounts and the corresponding sale is made, assessee also filed bank statement to substantiate the purchases made are genuine and bona fide. The assessee also submitted the purchase bills giving name, address, sales tax No, quantity and quality of goods purchased. The assessee made payment through payee’s account cheque and placed all material before AO. But the AO made addition of these unaccounted purchases and CIT (A) also confirmed the action of the AO. Aggrieved assessee came in second appeal before Tribunal. We find from the above facts that both the authorities below have not 4. doubted the above sales or other evidences. We also find that the purchases made are either from Grey market or these parties have given bills only. Once this position is clear, we are of the view that assessee might have earned little more profit on these bogus purchases i.e. after purchasing from Grey market and hence a reasonable profit element can be estimated. Hence, we direct the AO to disallowed 10% of the profit on the above bogus purchases of Rs.8,70,345 and restrict the addition to that extent only. We order accordingly. This issue of appeals is partly allowed. The next issue in this appeal of assessee is against the order CIT(A) 5. confirming the addition made by AO of Rs.6,18,632 on account of the mismatch of AIR in the case of contract charges received from K. Rajeja Universal P. Ltd. For this assessee has raised following ground No.2. “2. Additions of Rs.6,18,632 on account of AIR mismatch in case of contract charges received from M/s K. Raheja Universal P. Ltd..”.

6. We have heard rival contentions and gone through the facts and circumstances of the case. Facts of the case are that the AO received AIR information that the assessee is disclosing Gross Income from K. Rajeja Universal P. Ltd in their books amounting to Rs.1,7634,595 as against the receipts disclosed by K. Rajeja Universal P. Ltd in their books amounting to Rs.1,82,53,227/-. As there was a difference of Rs.6,81,632, the AO made addition as the assessee could not reconcile the difference. Aggrieved preferred the appeal before CIT (A), who confirmed the action of the AO by observing as under: - “4.4 I have considered the issue under appeal, carefully. I find that Ld.AO has wrongly objected the admission of evidence under Rule 46A because evidence under reference is not a new or strange or additional evidence but is some sort of evidence which AO is supposed to take on record and verify the facts of the case. The Rule 46A (3) clearly provides that CIT (A) cannot take into account any evidence produced by the appellant under sub Rule (1) unless, the AO has been allowed reasonable opportunity to examine the genuineness of additional evidence. Therefore, it is well within the power of the CIT (A) to admit an evidence relevant over the issue. Therefore, the objection of the AO regarding admission of evidence is ruled out. As regards, the merit of the case, it is pertinent to mention that appellant has failed to reconcile the discrepancy. AT page No. 9 of Submission dated 21.05.2014, appellant has mentioned as under: - “There is a difference of Rs.6,18,632/- between contract receipt as per Profit & Loss account and contract receipt as per Form 26AS. Our client has verified all the details regarding contract of M/s K. Raheja Universal P Ltd. However, it is not possible to find out from which source the builder has taken Contract receipt figure in TDS certificate as Rs.1,82,53,227/- as against Rs.1,76,34,595/- as per Profit & Loss account of our client.” 4.5 AO has mentioned that during the assessment proceedings, A.R. of the appellant has admitted the discrepancy vide letter dated 27/02.2013 thus it is very evident that there is no proper explanation of discrepancy. The reply as reproduced hereinabove reveals that appellant was not able to reconcile the contract receipt appearing in TDS certificate of Rs.18253227/- as against the receipt shown in profit and loss account from the client of Rs.17634595/- thus nothing has been brought on record which could suggest that actual contract price was the same as shown by the appellant in its books of account, hence the finding of the AO is still uncontroverted one. Therefore, addition so made of Rs.6,18,632 is confirmed.”. Aggrieved assesse is in second appeal before Tribunal.