2016 (5) TMI 704 - AT - Income Tax

Disallowance u/s. 40A(3) on account of unaccounted cash purchases - making an addition of outstanding liability u/s. 41(1) - Held that - We find from the facts of the case that the assessee has entered into cash transactions as per seized registers seized from the premises of the assessee which clearly revealed that there is cash transaction of the purchases and the A.O. has made estimation from these seized materials for all these seven years. We further find that even the outstanding liabilities and the provisions made are based on seized registers and balance-sheet filed by the assessee as per old returns. The CIT(A) confirmed the computation of unaccounted cash purchases calculated and estimation of disallowance based on seized material and on the basis of the reasonable projection made out of the entries recorded in the seized Annexure A1 and A 4 found during the course of search u/s. 142(1) of the Act on the premises of the assessee on 13.3.2008. Further, the CIT(A) also confirmed the outstanding liabilities and provision for the reason that no confirmation for such creditors was furnished by the assessee and genuineness of such liabilities was not proved to the satisfaction of the A.O. In view of these facts and circumstances we find no infirmity in the orders of the lower authorities and hence, the order of CIT(A) is confirmed. Similar are the facts in other years and additions are also on identical grounds, hence taking a consistent view, we dismiss all these seven appeals of the assessee. - Decided against assessee.

Issues Involved:
1. Ex parte decision by CIT(A).
2. Non-consideration of adjournment requests.
3. Ex parte assessment order under Section 144.
4. Non-compliance with summons and notices.
5. Non-supply of seized materials and documents.
6. Time-barring limit for assessment.
7. Computation of total income.
8. Disallowance under Section 40A(3) for unaccounted cash purchases.
9. Addition of outstanding liabilities under Section 41(1).

Detailed Analysis:

1. Ex parte decision by CIT(A):
The appellant argued that the Commissioner of Income Tax (Appeals) erred in deciding the appeal ex parte. The Tribunal noted that the CIT(A) had provided multiple opportunities for the appellant to appear and present their case, but the appellant failed to do so. Consequently, the CIT(A) proceeded with an ex parte decision.

2. Non-consideration of adjournment requests:
The appellant claimed that the CIT(A) did not consider the adjournment sought by their representative. The Tribunal observed that the CIT(A) had indeed considered the appellant's requests but found that the appellant repeatedly failed to comply with the notices and summons issued.

3. Ex parte assessment order under Section 144:
The appellant contended that the Assessing Officer (AO) erred in passing an ex parte assessment order under Section 144. The Tribunal found that the appellant did not file returns in response to notices issued under Section 153A and did not comply with notices under Section 142(1). Therefore, the AO was justified in making a best judgment assessment under Section 144.

4. Non-compliance with summons and notices:
The appellant argued that the CIT(A) did not appreciate the reasons for their non-compliance with various summons and notices. The Tribunal noted that the appellant failed to provide any valid reasons or evidence for their non-compliance, leading to the ex parte assessment.

5. Non-supply of seized materials and documents:
The appellant claimed that the AO did not supply all the seized materials and documents, which affected their ability to respond. The Tribunal found that the AO had based the assessment on seized documents and the appellant did not provide any evidence to show that they requested these documents and were denied access.

6. Time-barring limit for assessment:
The appellant argued that the AO adopted an incorrect time-barring limit of 31-12-2009 instead of the actual limit of 31-12-2010. The Tribunal did not find any substantial argument or evidence from the appellant to support this claim.

7. Computation of total income:
The appellant contested the computation of their total income at ?4,68,95,820/-. The Tribunal upheld the AO's computation, noting that it was based on seized documents and the appellant did not provide any evidence to refute the findings.

8. Disallowance under Section 40A(3) for unaccounted cash purchases:
The appellant challenged the disallowance of ?2,73,32,513/- under Section 40A(3) and ?1,43,85,532/- as unaccounted cash. The Tribunal found that the AO had reasonably estimated these amounts based on seized materials and upheld the disallowance.

9. Addition of outstanding liabilities under Section 41(1):
The appellant argued against the addition of ?51,12,565/- as outstanding liabilities. The Tribunal noted that the AO added these liabilities because the appellant did not provide confirmations or prove the genuineness of these liabilities. The Tribunal upheld the AO's addition under Section 41(1).

Conclusion:
The Tribunal dismissed all seven appeals of the appellant, confirming the orders of the lower authorities. The Tribunal found no infirmity in the ex parte assessments and the disallowances made by the AO based on seized materials and non-compliance by the appellant.

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