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2016 (12) TMI 51 - ITAT MUMBAI

2016 (12) TMI 51 - ITAT MUMBAI - TMI - Addition of bogus purchases of machinery - disallowance of depreciation - Held that:- AO has proceeded to make the additions on the basis of suspicion that the purchases have been made from Hawala entry operators listed on the website of Sales Tax Department but strangely, no independent inquiry to corroborate the transaction has been made by the AO. The full information in the shape of invoice copy, confirmation etc. was available before AO yet no notice u .....

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nation of the supplier before Sales Tax Department. But the proceedings before Sales Tax Department alone could not be the sole basis of addition in the hands of assessee before Income Tax Authorities. Further, as rightly observed by Ld. CIT(A), Section 69 had no applicability in the case of the assessee as the Machinery was duly recorded in the books of account. We are inclined to allow the appeal of the assessee and delete both the impugned addition - Decided in favour of assessee. - I.T.A. No .....

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llowance of depreciation thereupon for ₹ 4,28,625/-. 2. Facts qua the dispute are that the assessee was engaged in the business of Steel Re-rolling Mills and filed its return of income declaring total taxable income of ₹ 17,73,556/-. The same was selected for scrutiny assessment u/s 143(3) of the Income Tax Act, 1961 [the Act] wherein total income was determined at ₹ 50,59,681/- after making certain disallowances and adjustments vide Assessing Officer [AO] order dated 27/02/201 .....

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Return etc. The AO concluded that assessee failed to conclusively establish the physical delivery of Machinery and hence added the same to the income of the assessee u/s 69 as unproved purchases. Consequently, depreciation on Machinery amounting to ₹ 4,28,625/- as claimed by the assessee was also disallowed. Aggrieved, the assessee preferred appeal before First Appellate Authority but was unsuccessful vide CIT(A) order dated 26/11/2014. The assessee contended that initial onus was duly di .....

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been recorded in the books of account. Reliance was placed on various judicial pronouncements. Per contra CIT(A) observed that the assessee failed to provide transport details of the Machinery and also could not procure confirmation letters from the supplier. VAT on purchase of Machinery was duly deposited by the assessee and assessee did not seek cross examination of the supplier before Sales Tax Authorities. Finally, CIT(A) sustained the impugned additions albeit observing that Section 69 do n .....

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which he has duly fulfilled by supplying requisite documents. The VAT payment has been made by the assessee under threat by Sales Tax Department. The addition was made merely on the basis of website information without confirming the same from the supplier. The Ld. DR, on the other hand, contended that assessee being corporate assessee was required to maintain Fixed Asset Register as per the provisions of The Companies Act but failed to produce the same before any lower authorities. Mere payment .....

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