9911796707
TMI Blog2012 (12) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... re CIT (Appeals). Further, as per the Revenue, assessee could not prove the identity of the customers from whom it had effected purchase of old gold and diamonds, for cross verification. Again as per the Revenue, assessee's version that purchases were effected in the course of exchange of old gold and diamonds for new ornaments should not have been believed. 3. Facts apropos are that assessee, a company which was formed on 1.1.2008, had taken over the business of a firm, named, Kirtilal Kalidas & Co. From then on, assessee was filing its returns. For the assessment year covering the previous year 1.4.2007 to 31.3.2008, assessee declared income of Rs. 8,54,75,575/-. Subsequently, it seems this was revised to Rs. 8,62,66,240/- by filing a revised return. During the course of assessment proceedings, assessee was required to produce books of account and records relating to its business. As per the A.O., assessee filed details of advertisement, foreign travel, sales promotion and TDS reconciliation, and also cash book for Coimbatore branch and produced purchase vouchers for old jewellery and diamonds. Assessing Officer also noted that assessee had kept separate accounts branch-wise, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee from its customers at Coimbatore branch, Assessing Officer noted that no details or address of the vendors were available in the purchase vouchers. As per the A.O., no sales were also effected to such customers. He, therefore, considered such purchases to be non-genuine and an addition of Rs. 58,62,020/- was made for this also. 7. Assessee moved in appeal against both the above additions. As per the assessee, there was no case that any actual cash outflow was there, on account of purchase of old gold and diamonds. Entries in cash book were passed for the purchase of old gold and diamond from the customers by debiting the purchase account and crediting cash initially. At the end of the day, cash account was debited and concerned parties account was credited as contra. Therefore, as per the assessee, these were all contra entries passed in the cash book for showing credit purchase. There was no outflow of cash at all. Again as per assessee, when sales were effected to such customers, cash account was first debited and credit given to sales account. Again at the end of the day, parties accounts were debited and cash account was credited as contra. Result was that credit ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umber of cases on a date subsequent to date of purchase of old gold and diamonds and assessee also could not establish a one-to-one match between old gold purchase and sale of jewellery at a later date to the same parties. He submitted that assessee had produced fresh evidence before CIT (Appeals) and the matter required a re-visit by the Assessing Officer. Insofar as disallowance for purchase were concerned, learned D.R. submitted that assessee could not give address of the customers from whom it had effected the purchases and therefore, A.O. had no opportunity for verifying the claim of such purchases. 11. Per contra, learned A.R. strongly supported the order of CIT (Appeals). 12. We have perused the orders and heard the rival submissions. What we find from assessment order is that assessee had indeed produced books of accounts before the Assessing Officer. Assessing Officer has clearly noted that the assessee had produced purchase vouchers for old jewellery and diamonds. Assessing Officer also noted that assessee was maintaining branch-wise accounts which were consolidated at its Head Office. It is also noted from the assessment order that assessee had filed details of various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of sale of new jewellery to Mr. X on any subsequent date, say the sale value is for Rs. 2,500/- Cash A/c Dr. 2500/- To Sales A/c 2,500/- (Being sales made to Mr. X) X A/c Dr. 1000/- To Cash A/c 1000/- (Being sales made) From the above scheme of entries followed by the appellant, it is clear that there is no actual outflow of cash at the time of purchase, and these are only day book entries. It is submitted that this scenario is also outside the scope of Section 40A(3) of the Income-tax Act, as the same falls under the clause (d) of Rule 6DD of the Income-tax Act." Thus, when in the cash book, assessee showed a purchase of jewellery for cash, the actual scenario was that it was only a credit purchase since there were contra entries in the cash book itself giving credit to concerned seller. At the time of effecting the sales, the entries were made in a reverse manner for adjusting against the credit. In our opinion, such transactions could not be considered as violative of Section 40A(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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