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2015 (7) TMI 564 - AT - Income TaxAddition on account of bogus purchases from eleven parties - Held that - The assessee has explained before authorities below that the delivery of goods were directly made by the suppliers at the port for the purpose of export, therefore, there was no question of payment of transport charges separately by the assessee. We note that the assessee has placed on record the details and shown from the purchase bills that purchases are matched with the export sale in the case of the trading of goods for the purpose of export and therefore, there is no scope of any doubt about the purchases which are directly matching to the sale (export). Even otherwise, when the sales and all other quantitative details and figure regarding stock are accepted by the Assessing Officer then in the absence of any direct evidence showing the non genuineness of purchases in question, the addition is not sustainable on the basis of assumption and conjectures relying on the four statemetns recorded u/s 133A and that too without affording an opportunity of cross examination to the assessee. In view of the facts and circumstances of the case, we are of the opinion that the addition in quesiton on account of bogus purchase is not sustainable and accordingly the same is deleted - Decided in favour of assessee. Addition on account of DEPB license - Held that - In the facts and circumstances of the case when the assessee has clearly made out his case that the amounts recorded in the charts found during the survey was related to the DEPB licenses and the details show the items, amount and the license numbsers, therefore, in the absence of any material to prove the contrary, the evidence produced by the assessee is sufficient to prove the claim of the assessee. Accordingly in the facts and circumstances of the case, we are satisfied that the assessee has established its claim that the amount in question is representing the sale of DEPB licenses during the year. Accordingly the addition in question is deleted.- Decided in favour of assessee. Disallowance made u/s 40A(3) - Held that - As per the details filed by the assessee prima facie it appears that each payment made is less than ₹ 20,000/-. Further the authorities below have not verified and examined this fact that whether this payment was made for work of embroidery and fabrication of garments. For the year under consideration if each payment is less than ₹ 20,000/- then provisions of section 40A(3) is not applicable. The amendment brought to this section vide Finance Act 2008 w.e.f 01.04.2009, is not applicable to this year and if each payment is representing for a seaparate work or piece of work then the payment below ₹ 20,000/- cannot be disallowed by invoking the provisions of section 40A(3) as applicable for the A.Y. under consideration. Accordingly, in the facts and circumstances of the case, we set aside this issue to the record of the Assessing Officer for proper verification and examinaiton of facts and decide in terms of above observation.- Decided in favour of assessee for statistical purposes. Disallowance made u/s 43B in respect of PF & ESI - Held that - While disallowing this amount on account of delayed payment, the Assessing Officer considered the time period allowed under the respective Acts and not as per the provisions of section 43B. We find that all the payments were made by the assessee before the date of filing of return u/s 139(1) of the Income Tax Act, accordingly, the payment made on or before the due date of furnishing the return of income u/s 139(1) is allowable as provided under the proviso to section 43B. and accordingly the disallowance is not sustainable hence, deleted. - Decided in favour of assessee. Disallowance of manufacturing expenses - Held that - When the assessee has explained the reasons for difference the Assessing Officer ought to have examined the explanation and other relevant record. Further without disputing the difference of the expenses in the two set of details in respect of other eleven months, the Assessing Officer took the figure of difference only in respect of month of March despite the fact that the said difference was distributed for the other eleven months. In view of the above facts and circumstances of the case that we are of the opinion that this issue has not been properly examined by the Assessing Officer. Accordingly we set aside this issue to the record of the Assessing Officer for proper verification of the fact and consideration of explanation of the assessee and then decide the same as per law.- Decided in favour of assessee for statistical purposes. Disallowance of transfer entries made in the Books of Accounts - Held that - We find substance in the arguments of the Ld. Authorized Representative that when these parties can be examined as all the parties are assessed to tax and having permanent account numbers (PAN) and further the assessee has settled these accounts in subsequent year by making payments or by way of supply of goods then this issue requires a proper consideration and examination. We further note that there is no cash credit in the books of the assessee but the balance are shown as outstanding payable by the assessee to the sundry creditors. Therefore, the addition made by the Assessing Officer on account of unexplained cash credit without giving the finding whether these entries are in the nature of cash credit or not. Accordingly, in the facts and circumstances of the case, we remand this issue to the Assessing Officer to consider all the facts and circumstances as well as re-payment and settlement of the accounts by the assessee in the subsequent years which has been accepted by the departmetn. Further whether there is a cash credit appearing in the ledger account of these parties or whether these are only outstanding balances to be paid by the assessee, therefore, the Assessing Officer has to decide this issue on proper examination and consideration of all the relevant facts.- Decided in favour of assessee for statistical purposes. Addition on account of unexplained purchases - Held that - The Assessing Officer made the addition by suspecting the purchases on the ground that the assessee has shown the purchases from these parties without making any payment during the year. The CIT(A) has confirmed the addition made by the Assessing Officer by following the order for the A.Y. 2006-07. Though the impugned order of CIT(A) is not sustainable because we have already given the finding on the issue of bogus purchases for the A.Y. 2006-07, whereby, the addition made on account of bogus purchases has been deleted, however, in the facts of case except one party which is common for both the A.Ys namelly SPS Enterprises and other parties are not subject matter for the A.Y. 2006-07. We find that treating the purchases from these parties as bogus without disputing the quantitative details and purchases, stock and sales is not justified. Accordingly, in view of our finding for A.Y. 2006-07, we decide this issue in favour of the assessee. GP addition - Held that - even if the Assessing Officer was not satisfied with the book results of the assessee, the adoption of GP at 10% as against the GP of the assessee for the earlier years at 2.3% is not justified. We find that the Assessing Officer has not brought out any comparable or prevailing GP in the trade for adopting the TP at 10%. Further the Assessing Officer has completely over looked the relevant fact of GP for all other AYs of the assessee. Accordingly the issue is required to be considered by the CIT(A) on merits by considering all these aspects, though the assessee did not appear before the CIT(A), however, the impugned order of CIT(A) is very cryptic and without examination of any fact or relevant aspect of the matter. In the facts and circumstances of the case and in the interest of justice, we set aside the impugned order of CIT(A) and remit the matter to the record of CIT(A) for deciding the same afresh by considering all the relevant facts and circumstances as discussed above. The assessee is directed to co-operate in the proceedings before the CIT(A).- Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Confirmation of assessment order without proper opportunity. 2. Addition on account of bogus purchases. 3. Addition of Rs. 40 lakhs as bogus purchase. 4. Addition on account of DEPB license. 5. Disallowance under Section 40A(3). 6. Disallowance under Section 43B for PF & ESI. 7. Disallowance of interest under Sections 234A, 234B, and 234C. 8. Disallowance of manufacturing expenses. 9. Disallowance of transfer entries. 10. Addition on account of unexplained purchases. 11. Disallowance on account of bogus purchases of earlier years. 12. Ex-parte order and GP estimation for A.Y. 2008-09. Detailed Analysis: 1. Confirmation of Assessment Order without Proper Opportunity: The assessee did not press this ground, and thus, it was dismissed as not pressed. 2. Addition on Account of Bogus Purchases: The assessee, an export house, was disallowed purchases worth Rs. 24,73,00,784 based on statements from four suppliers during a survey. The CIT(A) remanded the case for cross-examination, but the summons returned unserved. The Tribunal found that without cross-examination, the statements violated the principles of natural justice. The Tribunal noted that the assessee's sales were not disputed, nor were quantitative details of stock. The Tribunal deleted the addition, stating that the purchases could not be treated as bogus without direct evidence. 3. Addition of Rs. 40 Lakhs as Bogus Purchase: This issue was addressed under the broader context of bogus purchases and was similarly deleted by the Tribunal due to lack of cross-examination and direct evidence. 4. Addition on Account of DEPB License: The Assessing Officer added Rs. 1,67,82,274 as bogus purchases based on loose papers found during a survey. The CIT(A) remanded the issue for verification. The Tribunal found that the assessee provided sufficient evidence of DEPB licenses and duty drawback receipts from customs authorities. The Tribunal deleted the addition, noting that the evidence was sufficient to prove the claim. 5. Disallowance under Section 40A(3): The Assessing Officer disallowed Rs. 1,40,97,079 for cash purchases, stating no payment exceeded Rs. 20,000. The Tribunal noted that each payment was less than Rs. 20,000 and that the payments were for embroidery and fabrication work. The Tribunal remanded the issue to the Assessing Officer for verification. 6. Disallowance under Section 43B for PF & ESI: The Assessing Officer disallowed Rs. 35,000 for delayed payment of PF and ESI. The Tribunal found that all payments were made before the due date for filing the return under Section 139(1). The Tribunal deleted the disallowance. 7. Disallowance of Interest under Sections 234A, 234B, and 234C: The Tribunal noted that the levy of interest under these sections is mandatory and consequential, requiring no separate finding. 8. Disallowance of Manufacturing Expenses: The Assessing Officer disallowed Rs. 22,36,05,346 due to discrepancies in monthly manufacturing expenses. The Tribunal found that the total manufacturing expenses were consistent, and the discrepancy was due to bill timing. The Tribunal remanded the issue for proper verification. 9. Disallowance of Transfer Entries: The Assessing Officer added Rs. 29,98,81,013 as unexplained cash credits. The Tribunal noted that these were sundry creditors with current accounts for business transactions. The Tribunal remanded the issue for proper examination and verification of the transactions. 10. Addition on Account of Unexplained Purchases: The Assessing Officer added Rs. 93,70,32,601 for purchases from five parties without payments. The Tribunal found no discrepancy in quantitative details and noted that payments were made in subsequent years. The Tribunal deleted the addition. 11. Disallowance on Account of Bogus Purchases of Earlier Years: The Assessing Officer disallowed Rs. 2,38,11,081 for purchases from Jupiter Overseas, relying on the previous year's disallowance. The Tribunal deleted the disallowance, consistent with its findings for A.Y. 2006-07. 12. Ex-parte Order and GP Estimation for A.Y. 2008-09: The Assessing Officer estimated GP at 10%, resulting in a total income of Rs. 19,35,16,560 against a declared income of Rs. 1,54,37,360. The Tribunal found the GP estimation unjustified without comparable data and remanded the issue to the CIT(A) for reconsideration on merits. Conclusion: The Tribunal partly allowed the appeals for statistical purposes, providing detailed directions for remand and verification on several issues.
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