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2021 (3) TMI 401 - AT - Income TaxEstimation of income - Bogus purchases - CIT-A restricted the additions @5% - HELD THAT - It is evident that the assessee was in possession of purchase invoices and it placed on record confirmation of accounts. The payments to the suppliers were through banking channels. The assessee produced stock register extract and correlated the tainted purchases with sales transactions. There could be no sale without actual purchase of material keeping in view the assessee s nature of business. The sales have not been disputed or disturbed by the revenue. In such a case, the approach of Ld. CIT(A) in estimating the additions @5% is quite fair reasonable. We concur with the same and therefore, this ground raised by the revenue stand dismissed. Addition u/s 68 - HELD THAT - During appellate proceedings, the assessee submitted documentary evidences to demonstrate the fulfilment of primary ingredients of Sec.68. The confirmations of the lender, bank statements, Income Tax Returns, PAN etc. were duly filed in support of the transactions. It is another fact that most of the loans has been taken either from directors or their relatives and therefore, the identity of the lender could not be doubted. The creditworthiness was established by adducing the bank statements as well as Income Tax particulars. The genuineness got established by confirmation of accounts. Since, the assessee discharged the primary onus, as casted upon him in terms of Sec. 68, of proving these transaction, the impugned loans could not be termed as assessee s unaccounted money. Therefore, no fault could be found in the approach of Ld. CIT(A) in deleting the addition u/s 68 as well as interest disallowance. The ground thus raised before us stand dismissed. Addition u/s 36(1)(va) - HELD THAT - Addition was deleted by Ld. CIT(A) by relying upon the binding judicial precedent in the shape of decision in CIT V/s Hindustan Organic Chemicals Ltd . 2014 (7) TMI 477 - BOMBAY HIGH COURT Since no contrary decision is on record, our interference is uncalled for. Ground stand dismissed.
Issues Involved:
1. Restriction of addition to 5% instead of 100% for bogus purchase transactions. 2. Deletion of addition under Section 69C due to lack of cross-examination opportunity. 3. Deletion of addition under Section 68 for unsecured loans. 4. Deletion of addition for delay in depositing Employees' Contribution to PF & ESIC. Detailed Analysis: 1. Restriction of Addition to 5% for Bogus Purchase Transactions: The revenue contested the CIT(A)'s decision to restrict the addition to 5% instead of 100% of ?4,70,00,643/- made by the AO under Section 69C for bogus purchase transactions. The AO had disallowed the entire purchases due to non-service of notices issued under Section 133(6) and added the amount as unexplained income. However, the CIT(A) observed that the assessee had provided sufficient evidence, including purchase invoices, ledger extracts, stock register extracts, and bank statements. The CIT(A) concluded that while the purchases might have been from the grey market, the profit element embedded in these transactions should be estimated at 5%, reducing the addition to ?12.61 Lacs. The tribunal upheld this decision, noting that the sales were not disputed and the assessee had provided adequate documentation. 2. Deletion of Addition Under Section 69C Due to Lack of Cross-Examination Opportunity: The revenue argued that the CIT(A) erred in deleting the addition under Section 69C by holding that the assessee was not provided an opportunity for cross-examination. The tribunal noted that the assessee had submitted detailed evidence supporting the purchase transactions. The CIT(A) found that the non-service of notices could not be the sole basis for making additions, especially since the assessee had provided substantial documentation. The tribunal agreed with the CIT(A)'s approach, emphasizing that the evidence provided by the assessee was sufficient to establish the genuineness of the transactions. 3. Deletion of Addition Under Section 68 for Unsecured Loans: The revenue challenged the deletion of the addition of ?2,61,53,918/- under Section 68 for unsecured loans from nine parties. The CIT(A) admitted additional evidence under Rule 46A and considered the remand report. The assessee provided confirmations from lenders, PAN copies, bank statements, and Income Tax Returns to establish the identity, creditworthiness, and genuineness of the transactions. The CIT(A) found that the AO had not issued a show-cause notice or called for further details during the assessment proceedings. The tribunal upheld the CIT(A)'s decision, noting that the assessee had discharged the primary onus under Section 68 by providing adequate documentation. 4. Deletion of Addition for Delay in Depositing Employees' Contribution to PF & ESIC: The revenue contested the deletion of the addition for delay in depositing Employees' Contribution to PF & ESIC. The CIT(A) relied on the decision of the Hon'ble Bombay High Court in CIT V/s Hindustan Organic Chemicals Ltd. (366 ITR 1) to delete the addition. The tribunal found no contrary decision on record and upheld the CIT(A)'s decision. Conclusion: The tribunal dismissed the appeal and cross-objections, upholding the CIT(A)'s decisions on all grounds. The order was pronounced on 04th March 2021.
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