Bhikshu Margam Vs DCIT (ITAT Pune)
Adhoc Additions Have No Legs: ITAT Deletes ₹50 Lakh Disallowance – When Evidence Exists, Suspicion Cannot Replace Verification: No Defects, No Disallowance: Tribunal Rebukes AO for Arbitrary ₹50 Lakh Estimate
Assessee, a firm engaged in manufacturing & trading of marble & stones, declared income of ₹54.20 lakh. AO noticed local, import & high-seas purchases of over ₹39 crore. AO held that names/addresses of local suppliers were not fully furnished & books/bills/vouchers were allegedly not produced. Since confirmations for creditors above ₹1 lakh & certain expense details were, according to AO, incomplete, he concluded that purchases & expenses could not be fully verified. AO therefore made an adhoc disallowance of ₹50 lakh out of cost of sales & other expenses.
CIT(A)/NFAC upheld the disallowance, observing that assessee failed to submit complete details, particularly expenses list dated 05.09.2019.
Before Tribunal, assessee demonstrated through extensive paper-book (invoices, purchase register, import documents, creditor ledgers, job-work ledger, C&F ledger etc.) that all details were duly filed in response to AO’s notices dated 21.10.2019, 15.11.2019 & 04.12.2019. Several pages of the order itself record AO’s acknowledgement of partial details. Assessee also cited Tribunal’s decision in sister concern Bhikshu Granimart (ITA 1158/PUN/2024) where identical additions were deleted.
