|The Tax Publishers2020 TaxPub(DT) 5412 (Mum-Trib)
INCOME TAX ACT, 1961
Where assessee had duly submitted the purchase invoices and payments were also done through banking channel and no disallowance was also made of contract work executed by assessee, in such case 12.5% disallowance of alleged Hawala purchases made by assessee would meet the ends of justice.
Income from undisclosed sources - Addition under section 68 - Alleged Hawala purchases - Assessee duly submitted purchase invoices and payments done through banking channel
Assessee filed appeal against the order of CIT(A) upholding the addition of the whole of the purchases made being alleged hawala purchases on the basis of alleged statement of Sales Tax Department and non-response by the concerned suppliers to the notice of the AO disregarding the fact that without consumption of materials, corresponding sales made would not have been possible. Held: Assessee had duly submitted the purchase invoices and payments were also done through banking channel. It was also noted that the assessee had done contract work and as per the contract specification assessee was required to provide materials and labour. No discussion, whatsoever, was there in the orders of the authorities below regarding the disallowance of the contact work executed by the assessee. Thus, in this view of the matter, ratio from the case of Nikunj Eximp Enterprises (P) Ltd. (2015) 372 ITR 619 (Bom) : 2015 TaxPub(DT) 1855 (Bom-HC) and several other case laws were applicable, that 100% disallowance in such cases is not permissible. Accordingly, assessee had done purchases from grey market and in such case 12.5% disallowance would meet the ends of justice.
Followed:Nikunj Eximp Enterprises (P) Ltd. (2015) 372 ITR 619 (Bom-HC) : 2015 TaxPub(DT) 1855 (Bom-HC)
FAVOUR : Partly in assessee's favour.
A.Y. : 2010-11
IN THE ITAT, MUMBAI BENCH
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