BHAGWATI STEEL CAST P.LTD ( FORMELRY BHATWATI STEEL CAST LTD),MUMBAI vs. ASST CIT 9(1), MUMBAI

Rival contentions have been heard and record perused. Facts in brief are that the assessee is engaged in the business of manufacturing of MS ingot and MS TMT bars. During the course of scrutiny assessment the AO made addition on account of purchases based on the statement made by third party amounting to Rs.14.45 crores, which was finally reduced to Rs.59.57 lakhs. The addition so retained was adhoc addition and were not as a result of any evidence of filing inaccurate particulars or concealing the income.

From the record we found that assessee has produced all the evidence to support the purchases, even the enquiries made during the assessment proceedings u/s.133(6) were properly confirmed. The books of accounts were duly audited and proper records were duly maintained by the assessee. We also found that the purchases were matched by corresponding sales. The final addition made on account of such purchases were not contested by the assessee to buy peace of mind and to avoid further litigation. Accordingly, the penalty levied with respect to the adhoc addition so retained was not justified. Ld. AR placed on record various orders of the Tribunal, wherein for such adhoc addition/disallowance of purchases, penalty so levied was deleted by the Tribunal in the cases of Chempure, 40 SOT 164, S.H.A.M.K. Distributors Pvt. Ltd., ITA No.2337/Mum/2010, order dated 31-5-2012 (33 CCH 002 Mum Trib and Harnish B. Shah, ITA Nos.1314 to 1316/Mum/2008 (126 TTJ 283). We had also gone through all these decision relied on by ld. AR, which are on the same facts. Applying the proposition of law laid down in these cases, we do not find any merit for the penalty imposed with respect to the adhoc additions retained on account of purchase.