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2017 (1) TMI 560 - ITAT MUMBAIDisallowance of alleged unverified purchases/expenditure - AO holding that amount of certain purchases and expenses debited in the books of accounts could not be properly verified and, therefore, he added a sum to the returned income - CIT(A), on the other hand, has restricted the disallowance to 25% - Held that:- At pages 50 to 62 of the paper book is placed the explanation of the assessee with regard to 24 such parties regarding the variation found by the Assessing Officer in cases where purchases recorded by assessee were of different amounts. In this regard, we may refer to one item of Simplex Engineering & FDR Works Pvt. Ltd. in whose case a sum of ₹ 7,83,247/- has been considered as unexplained purchases because the reply received from the suppliers showed that sales effected to the assessee has been shown as ₹ 37,99,042/-, whereas as the amount of purchase as per assessee was ₹ 30,15,795/-. In this context assessee had explained that the bill of the said supplier was of last year but assessee had accounted for the same in the instant year and relevant invoices of the party was also placed on record. The assessee had also furnished confirmed ledger account of the party of the earlier assessment years highlighting the bills which reconciled the difference. We find that there is no rebuttal to any of such explanation furnished and the entire amount has been added as unexplained purchases by the Assessing Officer, while the CIT(A) effected an overall scaling down of the disallowance. Considering the manner in which the replies/reconciliation filed by the assessee have been considered, in our view, the addition of ₹ 3,61,44,082/- is not at all justified. Even addition of ₹ 54,19,143/- on account of variation in the year of recording is also not justified at all. The verification exercise carried out by the Assessing Officer does not result in unearthing of any falsity in the claims made by the assessee and thus, no addition is merited. Absence of receipt of any reply from the suppliers cannot by itself demonstrate any bogus claim by the assessee unless any of the attendant facts bear out any bogus nature of the claim of expenditure by the assessee. Under these circumstances, in our considered opinion, additions not justified - Decided in favour of assessee. Addition with respect to the payment of labour charges and off-loading expenses - Held that:- A perusal of the statement reveals that though the contractor admitted of having arrangement with the assessee for providing labour but he has also tendered that a portion of the amount was refunded back to the assessee company. Because of such statement and for the fact that other contractors could not be produced, the amount of ₹ 1,47,91,709/- has been disallowed. Even disallowance out of offloading expenses have also been made in the cases of five parties, because the amount could not be verified at all. On this two elements of expenditure, in our view, the approach of the Assessing Officer in principle is justified in principle. The contractor examined by the Assessing Officer reveals inherent discrepancy in the claim of expenses by the assessee. Under these circumstances, in our view, certain addition deserves to be made even though specific discrepancy is available only with respect to the one of the parties. Considering the entirety of facts and circumstances, some amount of unverifiability in the claim of the expenses cannot be ruled out and, therefore, on this aspect of the matter we find no reason to interfere with the conclusion of the CIT(A) that 25% of such expenses of labour charges ₹ 1,47,91,709/- and out of off-loading expenses of ₹ 54,87,524/-, deserve to be disallowed - Decided in favour of assessee partly .
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