M/s Ravi Developments (ITA.No.764 & 765/Mum./2022)

 

Facts:

1. Purchases were made by the assessee from some parties blacklisted by the Sales Tax Department on account of Hawala Transactions. The letters issued to those parties for furnishing information u/s 133(6) was also returned unserved. So the AO disallowed the purchases made from those parties.

 

2. The assessee maintained that the sale was also made in same year out of those purchases. Moreover, there is no specific finding in the order of the AO for verification of the party in dispute.

 

ITAT Mumbai held as below:

1. The VAT authorities are generally examining the payment of VAT. The Sale Tax Department mostly concerned about the input tax credit availed by the party & payment of output tax. The whole addition was made on borrowed satisfaction from VAT department.

 

2. No cross verification was allowed by the AO. The assessee had utilized the purchases for its working progress. The stock was exhausted by the assessee during the year through sales.

 

3. So the addition is hereby deleted.