Chiman R. Patel, Mumbai vs Assessee

Shri Chiman R. Patel A C I T - 15(3) Shop No. 363, Bapty Lane 2nd Floor, Matru Mandir Vs. Opp. Municipal Indl. Estate Tardeo, Mumbai 400007 Grand Road (E), Mumbai 400004 PAN - AJFPP4167P Appellant Respondent

Appellant by: None Respondent by: Shri Premanand J.

Date of Hearing: 22.04.2015 Date of Pronouncement: 28.04.2015

ORDER

Per D. Manmohan, V.P.

This appeal by the assessee is directed against the order passed by CIT(A)-26, Mumbai and it pertains to A.Y. 2009-10.

2. The case was adjourned from time to time and notices were issued to the assessee by RPAD at the address mentioned in Form No. 36 but none appeared on behalf of the assessee. We therefore proceed to dispose of the appeal exparte, qua assessee.

3. We heard the learned D.R. and carefully perused the record.

4. Following grounds were urged by the assessee: -

"1. The learned CIT(A) erred in disallowing the Purchases amounting to Rs.2,51,20,930/- by treating the same as alleged bogus purchases, without considering the facts and circumstances of the case.

2. The learned CIT(A) erred in disallowing the labour expenses of Rs.29,31,200/- by considering the same as non genuine expenses, without considering the facts and circumstances of the case.

3. The learned CIT(A) erred in making an addition of Rs.33,95,000/- by treating the genuine Unsecured Loans as alleged Unaccounted cash credit and also disallowed the interest expenses amounting to 2 ITA No.5214/Mum/2013 Shri Chiman R. Patel

Rs.66,066/- paid for said unsecured loan, without considering the facts and circumstances of the case.

4. The learned CIT(A) erred in disallowing the claim of Travelling expenses of Rs.60,182/- on the alleged plea that the same has not been incurred for business purpose, without considering the facts and circumstances of the case.

5. The learned CIT(A) erred in disallowing the Curving Bending and Buffing Charges a mounting to Rs.82,8000/- on adhoc basis (i.e. 10% of total expenses) as being not verifiable and incurred in cash, without considering the facts and circumstances of the case.

6. The learned CIT(A) erred in disallowing the Motor Car rent amounting to Rs.23,600/- on adhoc basis (i.e. 10% of `1,18,000/-) as being not verifiable and incurred in cash, without considering the facts and circumstances of the case.

7. The learned CIT(A) erred in making an addition of Rs.2,22,152/- on the basis of non matching of AIR vis-avis books of accounts as alleged Unaccounted receipt, without considering the facts and circumstances of the case.

5. Assessee is engaged in the business of manufacturing and sale of metal furniture. For the year under consideration assessee declared total income of `18,71,072/- whereas assessment was completed on a gross total income of `3,37,73,700/-. The AO made the following additions:

a. Bogus purchases `2,52,20,930/- b. Labour expenses ` 29,31,200/- c. Loans and interest on loans `33,95,000 + `66,066/- d. Travelling expenses ` 60,182/- e. Cash expenses on curving, ` 82,800/- bending and buffing f. Motor car rent `23,600/- (20% of `1,18,000/-) g. Unaccounted receipts (on the `2,22,152/- Basis of unmatching AIR vis- a-vis books of account)

6. The learned CIT(A) confirmed the additions by considering the issues in detail, which are summarised as under: -

i) Bogus Purchases: Based on the finding of the AO in the remand report as well as the submissions of the assessee it is noted that sufficient opportunities were provided to the assessee to prove the genuineness of the purchases but the assessee could not prove the same. Therefore, simply on the basis of the purchase invoices and cheque payments it cannot be ascertained that the parties have 3 ITA No.5214/Mum/2013 Shri Chiman R. Patel

actually supplied any material to the assessee. The overall conduct of all these parties is highly suspicious. They have operated the bank accounts only for a short duration which is a characteristic of the parties providing accommodation entries of bogus purchases.

ii) Labour Expenses: As could be noticed from the remand report as well as the submission of the assessee there was abnormal increase in labour charges in the last month of the year (roughly 80%) which does not commensurate with the increase in the output of the assessee.

Concerned parties could not be located by the AO and in the Inspector's report it was revealed that these parties do not exist in the given address and hence the onus is on the assessee to produce the concerned parties. Assessee failed to do so. Therefore the learned CIT(A) upheld the disallowance made by the AO.

iii) Unsecured Loans and Interest thereon: Here also the learned CIT(A) considered the submissions of the assessee and the remand report of the AO and observed that except the sum standing in the name of M/s. Minaxi Metal Industries, which has been disallowed under the head purchase, neither at the time of assessment nor in the remand proceedings the assessee could file convincing documentary evidences to establish even the identity of the lenders. He, however, restricted the addition on unsecured loans to the tune of `28.95 lakhs and the alleged interest on such loan was also not allowed as deduction.

iv) Travelling Expenses: Assessee could not show any convincing reason which could justify that the payment in question was wholly and exclusively for business purposes. Otherwise also, it is not explained as to how this travelling expense helped the business of the assessee. Therefore, the claim was disallowed.

v) Curving, Bending and buffing expenses & Car Rent: The expenses under these heads were incurred in cash and no documentary evidence was filed to support these expenses. In the remand proceedings the assessee merely argued that the onus is on the AO to prove that the expenditure is not genuine and no fresh evidence has been furnished in support of his claim. For want of proper evidence 4 ITA No.5214/Mum/2013 Shri Chiman R. Patel

there remains a possibility of personal use of vehicle, the CIT(A) was of the opinion that a reasonable disallowance will meet the ends of justice and accordingly restricted the disallowance at 10% of the expenditure.

vi) Addition of `2,22,152/-: As per the AIR data base assessee received the sum as contract receipt from M/s. Ratnamani Metals and Tubes Ltd., which is not disclosed in the Profit & Loss Account. During the remand proceedings it was submitted that receipt of `1,71,034/- has been offered for taxation but the assessee has not filed any evidence to prove the same. The learned CIT(A) further noticed that there is a difference between the payment shown by /s. Ratnamani Metals and Tubes Ltd. and the amount owned by the assessee during the remand proceedings. Neither at the time of assessment proceedings nor at the time of remand proceedings assessee furnished any clarification or confirmation from concerned party. Under these circumstances, the discrepancy of `2,22,152/- still remains unexplained and thus confirmed the action of the AO.

7. Further aggrieved, assessee is in appeal before the Tribunal. Even at this stage no material, whatsoever, was furnished to contradict the findings of the AO as well as the CIT(A). On the contrary the AO, in the remand proceedings, had considered each aspect meticulously and the same were taken note of by the learned CIT(A). Eventhough the remand report was put to the assessee during the course of first appellate proceedings, no evidence, whatsoever, was placed before the CIT(A) to contradict the conclusions reached by the AO. Under these circumstances we are of the firm view that the order passed by the learned CIT(A) does not call for any interference.

8. In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court on 28th April, 2015.

Sd/- Sd/- (Rajendra) (D. Manmohan) Accountant Member Vice President

Mumbai, Dated: 28th April, 2015 5 ITA No.5214/Mum/2013 Shri Chiman R. Patel

Copy to:

1. The Appellant 2. The Respondent 3. The CIT(A) - 26, Mumbai 4. The CIT- 15, Mumbai City 5. The DR, "D" Bench, ITAT, Mumbai

By Order

//True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.