2016 (7) TMI 112 - HC - Income Tax

Addition of profit margins on alleged unaccounted sales - disallowance of bogus purchase - Held that - As decided in Sanjay Oil Cake Industries v. Commissioner of Incometax 2008 (3) TMI 323 - GUJARAT HIGH COURT though the purchases are shown to have been made by making payment thereof by Account Payee Cheques the cheques have been deposited in Bank Accounts ostensibly in the name of the apparent sellers thereafter entire amounts have been withdrawn by bearer cheques and there is no trace or identity of the person withdrawing the amount from the bank Accounts decided in favor of revenue.

Summary

Issues:
1. Challenge to the judgment and order passed by ITAT regarding disallowance of a specific amount.
2. Question of law framed by the Court regarding the addition of profit margins on unaccounted sales.
3. The appellant's contention on the error committed by ITAT in accounting for profit on unaccounted sales.
4. Lack of documentary evidence provided by the appellant to support their contention.
5. Reference to a previous decision by the Hon'ble Court in a similar matter.
6. Detailed analysis of the decision in the previous case and its application to the current matter.
7. Arguments presented by both parties regarding the evidence and findings.
8. Tribunal's findings on the genuineness of purchases and the involvement of apparent sellers.
9. Conclusion of the Tribunal and the Court upholding the decision against the appellant.

Analysis:
1. The appellant challenged the ITAT's judgment regarding the disallowance of a specific amount, which was partly confirmed by the Assessing Officer and CIT (Appeals). The ITAT held that the disallowance was not justified and deleted the amount in question.
2. The Court framed a question of law concerning the addition of profit margins on unaccounted sales, which were already reflected in the appellant's profit and loss account.
3. The appellant contended that the ITAT erred in accounting for profit on unaccounted sales that were already in the books of accounts.
4. Despite multiple adjournments to provide supporting documents, the appellant failed to produce any evidence to substantiate their claim.
5. The respondent referred to a previous decision by the Hon'ble Court in a similar case to support their argument.
6. The Court analyzed the previous case where the issue of inflated purchase prices was examined, leading to a decision against the assessee based on lack of traceability of apparent sellers and withdrawal of amounts by bearer cheques.
7. Both parties presented arguments regarding the evidence and findings, with the appellant emphasizing the lack of grounds for the addition based on the evidence provided.
8. The Tribunal's findings supported the Assessing Officer's conclusion that the apparent sellers were not genuine, leading to the decision to confirm the disallowance.
9. Ultimately, the Court upheld the Tribunal's decision, concluding that the order was made in accordance with the law and dismissing the appellant's appeal.