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TMI Blog2012 (9) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income is also required to be determined or computed in accordance with the provisions of I.T. Act, so the basic principle of determination of income has to be followed particularly in a case when the income is out of a trading activity of the assessee. - ITA NO. 637/PN/2010 - - - Dated:- 20-6-2012 - Shri Shailendra Kumar Yadav, And Shri R.K. Panda, JJ. Appellant by : Sri Sunil Pathak Respondent by : Ms. Ann Kapthuama ORDER Per R.K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 29-12- 2009 of the CIT(A), Kolhapur relating to the Assessment Year 1998-99. 2. At the time of hearing the learned counsel for the assessee did not press Ground of appeal No. 3 for which the learned D.R. has no objection. Accordingly Ground of appeal No. 3 is dismissed as not pressed. Ground of appeal No. 4 being general in nature is dismissed. 3. In Grounds of appeal Nos. 1 and 2, the assessee has challenged the order of the Ld. CIT(A), Kolhapur in confirming the addition of Rs. 6,82,460/- made by the AO. 4. This is the second round of litigation before the Tribunal. Facts of the case, in brief, are that in the order passed u/s. 143(3) on 02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee herself collected the payments made in the name of Yogesh Textile Traders. 6. It was also submitted by the AO that the payments claimed to have been made to Yogesh Textile Traders were in cash in excess of Rs. 20,000/- and therefore provisions of section 40A(3) of the I.T. Act are also attracted. 7. The learned CIT(A) provided the letters sent by the AO to the assessee for her comments. The assessee reiterated the same arguments as made before the CIT(A) earlier. It was submitted that gross profit of 8.15% declared by the assess jumps to 84.84% if the purchases from Yogesh Textile Traders are removed. It was submitted that the sales declared by the assessee has been accepted by the AO as well as the Sales Tax Department. The purchases from Yogesh Textile Traders were entered in the books of accounts. Therefore, if the purchases are disbelieved then the corresponding reduction had to be allowed from sales and closing stock. It was submitted that no defects were pointed out by the AO in the books of account. The GP ratio declared by the assessee when compared with the GP rate of earlier years gives better result than the earlier years. The AO had not doubted the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) be applied to purchases as infructuous. 9.1 Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 10. The learned counsel for the assessee reiterated the same submissions as made before the AO and the CIT(A) and submitted that the identity of the party stands proved since he has opened an account with the Bank. The proprietor of Yogesh Textile Traders might have shifted to some other place from Bhivandi for which he could not be traced and therefore the assessee could not produce the person before the AO. He submitted that if the purchases are considered as bogus, the gross profit rate comes to 84.84% which is just not possible in the business in which the assessee is engaged. He submitted that the purchases are made from a small trader and the genuineness of the same should not be doubted. 11. Referring to the decision of the Pune Bench of the Tribunal in the case of Harsh Engineering vide ITA No.720/PN/2001 order dated 03-05-2012 for the Block period 1988-89 to 1998-99 he submitted that under identical circumstances the Tribunal has accepted the purchases which were treated by the AO as unproved. He submitted that while doing so the Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous concerns. The ld. CIT(A) deleted such addition and the Tribunal upheld the order of the CIT(A) and dismissed the appeal filed by the Revenue by holding as under : 9. We have heard the submissions of both the sides. The main explanation of the assessee was that due to strict provisions of I.T.Act, assessee was expected to confirm the purchases but he was helpless due to the reason that the purchases were made from the farmers. Those farmers were neither giving any authentic receipt of purchase transaction nor were inclined to appear before any Court as a witness of the purchase of agriculture produce. So, the explanation of the assessee is that to overcome this difficulty and to safeguard its business interest, in the absence of proper confirmation of purchases, it was decided to open bank account in two names from whom the purchase were shown in the books of accounts through proper bank transactions. It has also been argued that this shows this simple reason for creation of two entities. However, there was no malafide on the part of the assessee because he had to record the purchases, otherwise there was no justification of the purchases shown by the assessee. We find this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue by holding as under : 3. We have considered the submissions advanced by learned counsel appearing for the parties and perused the impugned order. 4. Learned Senior Counsel Shri P.M. Shah appearing on behalf of respondent places reliance on two reported judgments in the case of Vishwasrao Madhavraon Chipulnkar Vs. Kamlabai Vishwasrao Chipulnkar [2003 (Supp.2) Bom. C.R. 197] and Gurudev Kaur V. Kakai [(2007) 1 SCC 546] in support of his submissions that unless the appellant makes out a substantial question of law, this Court need not entertain the appeal as a Court of facts. We have perused the cases cited (Supra). 5. We do not find that the appeal raises substantial question of law. The Commissioner of Income Tax (Appeals) considered the issues properly regarding the purchases and entries effected in the accounts of the assessee. We do not find any patent or gross error for causing interference in the impugned order. There is no merit in the appeal and the same deserves to be dismissed. 16. We find following the above decision the Pune Bench of the Tribunal in the case of Harsh Engineering (Supra) had allowed appeal of the assessee by accepting the purchases made f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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