Shamkant Gajmal Desale Vs ITO (ITAT Surat)
ITAT Surat held that disallowance of unaccounted purchases restricted to 12.5% of purchases instead of 25% as held by CIT(A). Accordingly, addition towards unaccounted purchases restricted.
Facts- The assessee filed his return of income on 08.12.2008, declaring total income at Rs.1,05,387/- for AY.2008-09. AO issued statutory notices u/s 143(2) and 142(1), but the assessee did not furnish any reply. Subsequently, AO issued show cause notice asking assessee as to why the assessment order should not be completed u/s 144 of the Act and why the purchases should not be disallowed. The assessee did not respond and furnish the details. The AO noticed that assessee had shown total purchases of Rs.25,85,747/-. In absence to any details, the AO added the above amount and assessed the total income at Rs.26,91,130/-.
CIT(A) confirmed addition of Rs.6,46,440/- and deleted balance of Rs.19,49,307/-. Being aggrieved, assessee has preferred the present appeal.
Conclusion- Held that the CIT(A) has restricted the disallowance to 25% of the unaccounted purchases. The CIT(A) observed that appellant failed to submit any documentary evidence to prove the sales, purchases and business activity. We, thus, find that the assessee has not been able to justify its returned income by producing necessary supporting evidences. In absence of relevant details, AO disallowed the entire purchases, which was restricted to 25% by the CIT(A). Before us, the assessee has not produced any evidence of details in support of the claim to tax its profit @ 8% of the receipts. Considering the totality of the facts, we are of the considered view that the ends of justice would be met, if the disallowance is restricted to 12.5% of the purchases. Accordingly, addition of Rs.3,23,220/- is confirmed and the AO is directed to delete the remaining addition. Accordingly, the ground is partly allowed.
