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TMI Blog2016 (10) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is a beneficiary of the transactions made by M/s. Crystal Enterprises and M/s. Induja Traders Pvt. Ltd., firms engaged in the business of issue of bills without delivery of materials; to the extent of Rs. 44,67,716/- and Rs. 25,93,040/- respectively. The AO required the assessee to produce these parties alongwith all relevant documents to establish the genuineness of the aforesaid transactions. The assessee expressed his inability to produce these two parties, but however, submitted Xerox copies of purchase bills, sale bills, bank statements indicating payments made and copies of ledger accounts of these two parties as appearing in its books. The assessee contended before the AO that there is no case of bogus purchases and that the aforesaid documentary evidence established that the said purchases amounting to Rs. 70,60,756/- from these two parties was genuine. The explanation put forth by the assessee did not find favour with the AO who was of the view that the inability of the assessee to produce these two parties before him, coupled with the information from Sales Tax authorities made it clear that the transactions with the aforesaid two parties viz., M/s. Crystal Enterpri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Shri Sanjay Ramchandra Kore by way of affidavit that these dealers are engaged in the business of issue of bills without physical delivery of materials. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 70,60,756/- made under section 40A(3) of the Act on account of non-genuine purchases from M/s. Crystal Enterprises and M/s. Induja Traders Pvt. Ltd. and directing the disallowance at 25% of alleged purchases of Rs. 70,60,756/- without giving any findings with regard to the genuineness of the claim of the assessee. 4. On the facts and in the circumstances of the case and in law, the Ld. C.I.T. (A) erred in deleting the additions of Rs. 44,67,716/ and Rs. 25,93,040/- made on account of purchases made from M/s. Crystal Enterprises and M/s. lnduja Traders Pvt. Ltd. and directing the disallowance at 25% of alleged purchases of Rs. 70,60,756/- ignoring the fact that the onus lies on assessee to produce the concerned parties which assessee failed to do. 5. On the facts and in the circumstances of the case, the Ld. C.I.T.(A) erred in deleting the additions relying on the Hon'ble Bombay High Court' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 0.68 Induja License 25,93,040 26,24,297 31,257 1.19 70.60,456 71,22,825 62,069 0.87 The overall G.P ratio for the whole year is also as under: - A.Y. G.P. 2010-2011 0.76% 2009-2010 0.75% 2008-2009 1.11% 4. The Appellant craves leave to add, alter or amend the above Grounds of Appeal." 4. Grounds 2 to 4 of assessee's appeal At the outset, the learned A.R. for the assessee submitted that assessee is not pressing grounds raised at S.Nos. 2 to 4 in its appeal. Since the grounds at S. Nos. 2 to 4 of the assessee appeal (supra) are not being pressed, the same are rendered infructuous and are accordingly dismissed. 5. Grounds 1 to 5 of Revenue's appeal Ground No. 1 of assessee's appeal 5.1 The only issue for consideration and adjudication before us is with respect to the genuineness or otherwise of purchases amounting to Rs. 70,60,756/- allegedly made by the assessee from M/s. Crystal Enterprises (i.e. Rs. 44,67,716/-) and M/s. Induja Traders Pvt. Ltd. (i.e. Rs. 25,93,040/-). Revenue challenges the impugned order of the learned CIT(A) in deleting the addition in respect of 75% of the aforesaid purchases from these two parties. On the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases, were held to be unjustified by various Coordinate Benches of this Tribunal and deleted. In this regard, the learned A.R. placed reliance on, inter alia, the following judicial pronouncements of the Coordinate Benches: - (i) Ramila Pravin Shah (ITA No. 5246/Mum/2013 dated 05.03.2015) (ii) Ramesh Kumar & Co. (ITA No. 2959/Mum/2014 dated 28.11.2014) (iii) Rajeev G. Kalathil (ITA No. 6727/Mum/2012 dated 02.08.2014) It is submitted that in the instant case also the AO has made the impugned addition on the basis of statements given by third parties before the Sales Tax Department. 5.4.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record; including the judicial pronouncements cited. The assessee, Prop. S.R. International, is engaged in the business of trading in licences. The AO observed that the Sales Tax Department of the Government of Maharashtra has listed out names of certain dealers, who were allegedly providing accommodation entries to various parties without doing actual business. The AO noticed that the assessee had made purchases from two such parties, whose names found place in the list give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO was not justified in making such additions based on statements given by third parties before the Sale Tax Department without conducting any further investigation to establish with corroborative evidence that the said purchases were bogus. The Coordinate Bench in the case of Ramila Pravin Shah (supra) in this regard at para 6 and 7 thereof has held as under: - "6. On the other hand, the Id. AR submitted that the additions made in the case of some other assesses on identical reasons have been deleted by the Co-ordinate Benches of the Tribunal in the following cases a) Ramesh Kumar and Co V/s ACIT in ITA No.2959/Mum/2014 (AY-2010-11) dated 28.11.2014; b) DCIT V/s Shri Rajeev G Kalathil in ITA No.6727/Mum/2012 (AY- 2009-10) dated 20.8.2014; and c) Shri Ganpatraj A Sanghavi V/s ACIT in ITA No. 2826/Mum/2013 (AY-2009-10) dated 5.11.2014 In all the above said cases, the Co-ordinate Benches of the Tribunal has held that the AO was not justified in making the addition on the basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation. In the instant case also, the assessing officer has made the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t did not mean that the assessee was not entitled to carry on the business activity in March 1985. They could not be compelled to carry on the business activity throughout the year. There were no good reasons to disbelieve the sales made by the assessee to 'S'. No sales were likely to be effected if there were no purchases. A sale could be made if the goods were available with the seller. From all these facts on record, a reasonable and convincing inference which could be drawn, was that the assessee purchased the textile goods, sold them and adjusted the same towards the loan taken by it. Therefore, the assessee was entitled to get the entire deduction." I have also taken into consideration, the G.P Ratio/G.P. Margin of the appellant in the previous A.Y. as well as subsequent Assessment Year. If the addition made by the A.O. is accepted, then G.P. Ratio of the appellant during the present A.Y.will become abnormally high and therefore that is not acceptable because it onus of the A.O. by bringing adequate material on record to prove that such a high G.P. ratio exists in the nature of business carried out by the appellant. Further, it has to be appreciated that (i)Payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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