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TMI Blog2016 (9) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon order for the sake of convenience. 2. The only issue in the appeals of the Revenue is that the Ld. CIT(A) erred in deleting the addition made on account of purchases made from suspicious dealers which are allegedly involved in issuing bills and purchases made from the parties in dispute are not genuine. 3. Brief facts are that the assessee is an individual and proprietor of M/s. Metal Agencies and conducting the business of trading of ferrous and non-ferrous metals. The assessments of the assessee for these three assessment years i.e. 2009-10 to 2011-12 are re-opened 147 of the Act on the basis of information received from investigation wing who in turn got the information from Sales tax authorities that some dealers are not deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine, the bogus purchases are rightly brought to tax by the Assessing Officer. 6. The Ld. Counsel for the assessee vehemently supports the orders of the Ld. CIT(A) in holding that the purchases made by the assessee are genuine. He submits that the Ld. CIT(A) having held that there is one to one match of purchases and sales, quantitative details of stocks are tallied, even 5% which was sustained by the Ld. CIT(A) is not proper and Ld. CIT(A) should have allowed the entire purchases as genuine. He further submits that when the sales are accepted as genuine, the corresponding purchases cannot be bogus just because the parties were not produced before the Assessing Officer. He places reliance on the decision of the Jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Ld. CIT(A) in holding that the purchases made by the assessee are genuine. 7. We have heard the rival contentions and perused the orders of the authorities below. On a reading from the assessment order, we find that the Assessing Officer treated certain purchases from various parties as bogus purchases for the reason that assessee has not produced the dealers, suppliers did not exist etc., and therefore the genuineness of purchases are not proved. The Assessing Officer concluded that the assessee must have purchased these goods from the gray market by investing unaccounted cash which is not recorded in the books of account. Therefore, the entire purchase made from open market was treated as unexplained expenditure u/s. 69C of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s vs. ITO (ITA Nos. 4012 to 4015 and 4020 to 4021/Mum/2012, the Hon'ble ITAT, Mumbai observed that there was no material on record to say that the purchases made by the assessee was bogus except the general statement recorded by the Department in the case of Shri Rakesh Kumar Gupta, which was later on retracted. The Hon'ble ITAT held that in absence of any adverse material brought on record, the addition made in the case of assessee will be based on presumption only and it cannot be sustained in the eyes of law. (ii) The appellant on his part has produced the purchase invoices, daily stock register, ledger copies etc., and the payments have been made through banking channel. Though the AO has alleged that the payments to these par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. In the case of CIT vs. Nikunj Eximp Enterprises (P.) Ltd. [2013] 216 Taxman 171 (Bom.), the jurisdictional Hon'ble High Court of Bombay held that where sales supported the purchases and payment was made through banks, merely because suppliers had not appeared before AO, the purchases could not be rejected as bogus. (iv) Under Income Tax Act, i 961 what can be taxed is the real income. Even though the transaction is not verifiable, what is taxable is the income component, and not the entire transaction amount. I find that in many such cases, the additions are made based on the GP/NP ratio. In the present case of appellant, in fact the AO himself has not ruled out the possibility that the assessee must have purchased these goods from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 775) (SC) SheoNarain DuliChand v. CIT (72 ITR 766)(AIl.) The appearance of a purchase party on the website of Sales Tax Department may raise a question mark; however the allowance of purchase expenses has to be necessarily decided taking into view the totality of the circumstances of appellant's claim. Hence, I am of the opinion that the opinion that it would be justified to restrict the addition made to Rs. 1,15,887/- and accordingly delete the balance addition of Rs. 23,17,742/- 1,15,887/- = Rs. 22,01,855/-. Therefore, the ground No. 1 of appeal is partly allowed." 8. On going through the order of the Ld. CIT(A), we do not find any valid reason to interfere with the observations and to hold that the purchases made are bogus for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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