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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 ..... purchases made are bogus for the reason that none of the findings of the Ld. CIT(A) have been rebutted by the Revenue. Also as there is no basis for sustaining the addition of 5% of purchases u/s. 69C since the purchases have been held to be genuine and there is no scope for sustaining the same partly. Thus, the cross objections filed by the assessee are allowed. - I.TA Nos. 4526 to 4528/Mum/2014, C.O. Nos. 212 to 214/Mum/2015 - - - Dated:- 27-7-2016 - SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER For The Revenue : Shri Kailash Gaikwad For The Assessee : Shri Vimal Punamiya ORDER PER C.N. PRASAD, JM: These appeals are filed by the Revenue and the Cross objections are filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Aggrieved by the assessments, the assessee preferred appeals before the Ld. CIT(A) and the Ld. CIT(A) accepted that the assessee has purchased the goods and sold the same and the transactions are genuine, the purchases are not bogus. There is one to one corelation to the purchase and sales therefore purchases are genuine. However, the Ld. CIT(A) has granted relief of 95% and confirmed the 5% of purchases holding that purchases can be in grey market against which order both revenue as well as the assessee filed appeals/cross objections before us. 5. The Ld. Departmental Representative vehemently supported the orders of the Assessing Officer in treating the purchases made from various parties as bogus purchases for the reason that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... highlights a possibility which is tentative in nature. Therefore, the Ld. Counsel for the assessee submits that on mere suspicion and without making any enquiry addition was made which is not sustainable in law. He further submits that however strong suspicious may be, that suspicion cannot be an evidence for making the addition. Reliance was placed on the decision of the Co-ordinate Bench in the case of DCIT Vs Rajeev G. Kalathil in ITA No. 6727/M/2012 dated 20.8.2014, wherein it was held that suspicion of highest degree cannot take place of evidence. He also places reliance on the decision of the Hon ble Supreme Court in the case of K.P. Varghese Vs ITO (131 ITR 579) for the preposition that additions cannot be made merely on assumptions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned expenditure. While coming to such conclusion, the Ld. CIT(A) observed and held as follows: 5.3 I have perused the assessment order, submissions of appellant, and the facts and circumstance of the case. On careful examination of the same, I observe as under: (i) The addition has been made on the basis of information received from investigation wing based on the investigation carried out by the Sales Tax Authorities. The parties have not directly named the appellant, and it appears that the parties must have made a general statement before the sales tax authorities. No attempt seems to have made by the A.O. to enquire with the parties as to whether they had actually sold goods to the appellant or not, and thereafter to confront ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions to be bogus and added back the purchases to income of the assessee. The Hon'ble Gujarat High Court held that the tribunal was justified in deleting e addition on the ground that there was no evidence to show that vouchers given by those parties to assessee were bogus or that any part of those payment came back to assessee. (iii) The appellant is a trader and the goods purchased were used in sales, and not in consumption as a manufacturer. It is pertinent to note that unlike manufacturer of goods, a trader is able to establish one to one co-relation between the goods purchased and sold. The AO has not found any such fault in the present case. The purchases made are followed by sales. The AO has agreed that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods from grey market by investing unaccounted cash. In such a situation, even assuming that the appellant would have purchased the goods by investing the unaccounted cash, still it is undisputed that the sale proceeds of said goods have been duly accounted for in the books and offered to tax. Hence, the addition of entire purchase amount cannot be made in the present case. Rather, the cause of justice would be met by making addition of a reasonable percentage of such purchases in order to fulfill the gap of any revenue leakage in aforesaid circumstances. In present circumstances, I find it appropriate to confirm addition to the extent of 5% of the alleged purchases i.e. 5% of ₹ 23,17,742/- = Rs.l,15,887/- . 5.4 I find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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