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TMI Blog2017 (1) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... er and accordingly, we direct the Assessing Officer to make further addition of 3 % of the bogus purchases and accordingly estimate the income. We direct the Assessing Officer accordingly. Preliminary expenses written off u/s 35 D (1) - Held that:- The details regarding the public issue expenses in respect of commission, brokerage, other charges for drafting, typing and printing are not available in the records of the revenue i.e. in the order of the AO or the CIT (A). Hence, we are of the view that none of the authorities below have examined this issue in proper perspective. Accordingly, we restore this issue to the file of the Assessing Officer for fresh examination after calling for details of these expenses and accordingly, decide the same as per law. - ITA No. 7773/Mum/2014 - - - Dated:- 3-11-2016 - SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM For The Revenue : Shishir Dhamija, DR For The Assessee : None ORDER PER MAHAVIR SINGH, JM: This appeal by the Revenue is arising out of the order of CIT (A)-18, Mumbai in appeal No. CIT (A)-18/IT-42/DCIT-8(3)/2013-14 vide dated 14-10-14. The Assessment was framed by DCIT Circle -8(3), Mumbai for the AY 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HREYAS MARKETING AGENCY 2009-10 2010-11 55118398/- Total 241806358/- The AO required the assessee to explain the above purchases and prove that these are genuine. The assessee explained that all the purchases are recorded in the books of account and supported by bills and vouchers. The assessee also explained that the payments in relation to these purchases are made by account payee cheques and these cheques are encashed by the respective parties. The assessee also explained that all these purchases are recorded in the sales tax returns as well as stock registers maintained by assessee. The assessee produced complete bills and vouchers and books of accounts before the Assessing Officer. It was claimed by assessee that there is no unaccounted purchases in the books of account of the assessee and all the books of account are audited by a chartered accountant and there is nothing incriminating found in the audit. But the assessing officer has not accepted the explanation of the assessee and made disallowance of bogus purchases amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid in cash provisions of section 4OA (3) gets clearly attracted, which calls for disallowance of expenditure in toto as per the prevailing statutory provisions. Further the cost of goods purchased in cash is met from undisclosed sources the provision of section 69C comes into play being unexplained expenditure. Thus on both these accounts the expenditure incurred on purchases calls for disallowance. In assessee s case whatever be the situation the disallowance of expenditure incurred by the assessee calls for disallowance in toto. Accordingly disallowance of ₹ 24,18,06,385/- made to the total income. Penalty proceedings u/s 271 (1)(c) of the I.T. Act, 1961 are initiated separately for the default committed by the assessee within the meaning of that section. Aggrieved assessee preferred the appeal before CIT (A), who considering the submissions of the assessee and also calling for remand report from the Assessing Officer deleted the addition by observing as under :- 2.7 From the facts of the present case, it is noticed that the assessee has made circular purchases and dales with 12 parties as declared in sales-tax return. The genuineness of purchases an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration which is explained as major manufacturing activity in the last year and major part of the trading activity if the year under consideration. Keeping in view of these facts and circumstances, I am of the view that 2% of the purchases made from the hawala parties amounting to ₹ 65,65,30,470/- which works out rs.1, 31, 30 ,609/is fair and reasonable hence, upheld and the balance addition made is deleted. Ground of appeal is partly allowed. Aggrieved against the order of CIT (A) in restricting the disallowance of bogus purchases at 2% being profit for purchases, made by assessee from Grey Market, the Revenue came in second appeal before the Tribunal. 4. We have heard rival contentions and gone through the facts and circumstances of the case. Admitted facts are that the AO neither in the original proceedings nor during remand proceedings objected to sales made by assessee. In that eventuality it is imperative on our part to hold that there must be purchases. Whether the purchases are from Grey Market or whatever the assessee has made purchases although payments are made to hawala dealers. In that eventuality it is to be seen whether the payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous years. He allowed by observing in Para 3.4 of appeal order is as under:- 3.4 From the plain reading of this Section 35D (2) (c) (iv), where the assessee is a company and the expenditure incurred in connection with the public issue of shares in or debentures of the company, the commission, brokerage and other charges for drafting, typing and printing are covered and the 115m amount of the total expenses is allowable in five successive previous years. Since the assessee has claimed deduction as per the provisions of Section 35D (2) by debiting 1/5th of the total expenditure incurred on public subscription of shares is covered by these provisions. Therefore, in 'my view, the appellant has rightly claimed 1/5 deduction of rs.1,12,09,210/u/s 350(2). Thus, the addition made by the AO is not sustainable, hence, deleted. Ground of appeal is allowed. Aggrieved, now Revenue is in second appeal before Tribunal. 7. We have heard the rival contentions on this issue and gone through the facts and circumstances of the case. After hearing learned senior DR and going through the facts of the case, we find that the details regarding the public issue expenses in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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