PLYSTONE PLYWOODS PRIVATE LIMITED,KOLLAM V. ASSISTANT COMMISSIONER CENTRAL CIRCLE 2, COIMBATORE

ITA 2511/CHNY/2024

AI Insights

The case involves Plystone Plywoods Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-20, Chennai, concerning disallowances made on purchases from unregistered dealers. A search and seizure operation under section 132 of the Income-tax Act, 1961, revealed that the company had made purchases from local unregistered dealers without proper invoices, and payments were made in cash. The Assessing Officer (A.O.) disallowed 30% of the total cost of these materials. The CIT(A) confirmed a reduced disallowance after reassessing the amounts involved. The company contested the additions, arguing that no incriminating material was found during the search, referencing a Supreme Court decision. However, the Tribunal found that the assessment was abated due to the timing of the search and upheld the disallowances.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107174 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Other Referred Cases: PCIT vs. Abhisar Buildwell Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANN MARRY BABY
• Assessee Lawyers: V. ALAGAPPAN; C.A VIRTUAL
• Keywords: Search and seizure
• Section: 143(2); 132; 153A

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0019ी मनु क ुमा र िग र, \u0011ा ियक सद! एवं \u0019ी जगदीश, लेखा सद! क े सम( BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2511/Chny/2024 िनधा 9रण वष9 /Assessment Year: 2016-17 Plystone Plywoods Pvt. Ltd., 24/27, Kudakkada Veedu, Kalkulangara North, Near Rameswaram Temple, Kerala – 691 012. Vs. The Asst. Commissioner of Income Tax, Circle-2, Coimbatore. [PAN: AAECP 0432A] (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीलाथG की ओर से/ Appellant by : Shri V. Alagappan, C.A (virtual) IJथG की ओर से /Respondent by : Ms. Ann Marry Baby, CIT सुनवाई की तारीख/Date of Hearing : 30.01.2025 घोषणा की तारीख /Date of Pronouncement : 04.04.2025 आदेश / O R D E R PER JAGADISH, A.M: Aforesaid appeal filed by the assessee for Assessment Year (AY) 2026-17 arises out of the order of Learned Commissioner of Income Tax (Appeals)-20, Chennai [hereinafter “ CIT(A)”] dated 30.08.2024. ITA No.2511/Chny/2024 :- 2 -: 2. The effective ground of appeal in this appeal of assessee is against confirming the disallowance to the extent of Rs.8,92,227/- in respect of bought note purchases made by the A.O . 3. The assessee is engaged in the manufacture of plywood located in Ernakulam. A search and seizure operation was conducted u/s. 132 of the Income-tax Act, 1961 (hereinafter “the Act”) in the case of the assessee on 21.09.2017 and it was found that the purchase of the raw materials made from local unregistered dealers (agriculturists), were without proper purchase invoices and the payments were made in cash. The A.O in the absence of documentary evidences disallowed 30% on total cost of material of Rs.87,79,192/-. On appeal, the Ld. CIT(A) found that purchases from unregistered dealer was only Rs.29,74,090/- so he confirmed 30% of such bought note purchases and restricted disallowances to Rs.8,92,227/-. The assessee is in appeal before Ld. CIT(A), had also contended that no addition could be made in the assessment order passed u/s. 153A of the Act in the absence of incriminating material, in view of decision of Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. ITA No.2511/Chny/2024 :- 3 -: 4. The Ld AR before us has submitted that there was no incriminating material found during the search, therefore in view of decision of decision of Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd., no addition can be made in the order passed u/s 153A of the Act. The Ld. AR on merit has submitted that assessee’s accounts are audited and therefore adhoc disallowances is not called for. The Ld. AR has further submitted that assessee has written back Rs.8,78,891/- in subsequent year due to quality issue, therefore it amounts to double disallowances. 5. The Ld. Departmental Representative (DR), on the other hand, has relied on the orders of lower authorities. 6. We have heard the rival submissions, and perused the materials available on record. The assessee has challenged the addition on the ground that there is no incriminating material found during search therefore, no addition can be made in the assessment order passed u/s. 153A of the Act. In this case the assessee had filed its return of income on 28.03.2017 and the time available for issue of notice u/s. 143(2) of the Act was till 31.09.2017. Meanwhile, the search was conducted on 21.09.2017. Therefore, on the date of search, time to issue notice u/s. 143(2) of the Act was not expired and the assessment ITA No.2511/Chny/2024 :- 4 -: was to be treated as an abated assessment, and A.O was empowered to make regular assessment. Accordingly, we uphold the finding of Ld CIT(A) and dismiss this ground of appeal . 7. As regards to addition of Rs.8,92,227/- sustained by the Ld. CIT(A), the assessee has failed to submit bills or vouchers related to the bought note purchases for which payment was made in cash. The director of company Shri G Vishnu Prasad, also during the search had admitted the fact that purchase invoices in the case of local unregistered dealers were made manually and payments had been made in cash. We, therefore find no infirmity in the order of the Ld.CIT(A) in sustaining the addition to the extent of Rs 8,92,227/-. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced on 04th April, 2025. Sd/- Sd/- (मनु क ुमार िग र) (Manu Kumar Giri) \u0011ाियक सद! / Judicial Member (जगदीश) (Jagadish) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 04th April, 2025. EDN/- ITA No.2511/Chny/2024 :- 5 -: आदेश क\u0019 \bितिल प अ े षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Coimbatore 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF "