I.T.A. No. 355/Mum/2017. Case: Ms. Sudhir Brothers Vs ITO-31(3)(4). ITAT (Income Tax Appellate Tribunal)

Case NumberI.T.A. No. 355/Mum/2017
CounselFor Appellant: Shri Yogesh Thar & Ms. Ritu Panjabi, Advs. and For Respondents: Shri Aarsi Prasad, Adv.
JudgesShri B.R. Baskaran (AM) and Ramlal Negi (JM)
IssueIncome tax Act
Judgement DateMay 17, 2017
CourtITAT (Income Tax Appellate Tribunal)


  1. The assessee has filed this appeal challenging the order dated 14.9.2016 passed by the learned CIT(A)-42, Mumbai and it relates to A.Y. 2010-11. The assessee is aggrieved by the decision of the learned CIT(A) in confirming the following disallowances:

    (a) Addition of ` 64,26,260/- relating to purchases

    (b) Disallowance of labour charges of ` 20,09,073/-

    (c) Disallowance of labour charges of ` 30,80,428/-

    (d) Disallowance of motorcar expenses and depreciation ` 1,28,037

  2. The assessee is a partnership firm and is engaged in the business of fabrication and assembling of machinery.

    3. The first issue was related to the addition of Rs.64,26,260/- relating to purchases. During the course of assessment proceedings, the Assessing Officer issued notices to the following parties from whom the assessee had purchased goods/services:-

    (a) M/s. Ansh Hitech Ventures Pvt. Ltd. - ` 64,26,260/-

    (b) M/s. Gautam Engineering Works - ` 20,09,073/-


    ` 84,35,333/-


    Notices were returned back by the postal authorities with the endorsement ''not known''. Hence the Assessing Officer took the view that the purchases made from the above said parties were not proved and accordingly added the entire sum of ` 84,35,333/- as unexplained expenditure.

  3. Before the learned CIT(A), the assessee explained the transactions outstanding in the name of Ansh Hitech as under. It was submitted that the company named M/s. Ducon Technologies (I) Pvt. Ltd. (Ducon in short) had obtained a contract from M/s. Larsen & Toubro Limited (L&T) for supply of Cyclone Separator System. Initially Ducon assigned the contract relating to assembling and fabricating of cyclone separator system to M/s Ansh Hitech. Since L&T was not satisfied with the work of Ansh Hitech, M/s. Ducon cancelled the purchase order placed with M/s. Ansh Hitech and raised a new purchase order on the assessee after mutual discussion. It was agreed by all the concerned parties that the work already executed by M/s. Ansh Hitech would be purchased by the assessee and payment thereof will be paid directly by M/s. Ducon to M/s. Ansh Hitech. Accordingly, M/s. Ansh Hitech raised invoice for a sum of ` 64,24,260/- on the assessee in respect of materials supplied to it. As agreed, M/s. Ducon made direct payment of ` 60,55,525/- to M/s. Ansh Hitech. The assessee has also furnished a certificate obtained from M/s. Ducon in this regard. The learned CIT(A) called for a remand report from...

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