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TMI Blog2016 (9) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... In the interior parts the goods are not available easily. The Government contracts are time barring contract and the work is required to be completed on time. Accordingly, when the material is required in emergency the telephonic orders are placed upon the parties who supply the materials at site. The corresponding consumption of materials in respect of which the purchases were affected by the assessee firm have not been doubted by ld. AO. Neither any document information has been provided by the AO nor he has given any opportunity to the assessee to cross examine the said party and AO has concluded that the purchases by assessee company from the said party is bogus merely on the basis of information from Sales Tax Department. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of assessment for A.Y.2010-11, the AO observed that as per information received from Sales Tax Department, some of the parties were bogus supplier and the assessee was found to be having purchased materials from the eight parties, who were reported to be bogus by the Sales Tax Department. Accordingly, the AO made addition of ₹ 1,19,80,841/- in respect of these parties. The assessee was asked vide Show Cause Notice to provide the whereabouts of the parties, the assessee himself submitted the ledger, of the parties which were not relied upon by the AO as the assessee has not produced the parties. In view of the findings in the paragraph no.4, it was held by the Assessing Officer that the assessee did not purchase any goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g debited to Profit and Loss Account of the Appellant. 6. If the action of the assessing officer of treating the purchases of ₹ 1,19,80,841/- is upheld on the ground that the alleged purchases were bogus, his gross profit would work out to 21.99% which is not tenable especially keeping in mind that he is a contractor for Government where such margins are not available in the tendered contracts. 7. However, the facts also remains that the above alleged bogus purchases are not fully verifiable and the parties were not produced for verification. In view of the above, the Assessing Officer is directed to make a lump sum addition of ₹ 3,00,000/- as the income escaped tax and delete the balance 'addition. This gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. ACIT, ITA No.2826/Mum/2013 iii) M/s G.V.Sons Vs. ACIT, ITA No.2239/Mum/2012 iv) Shri Deepak Popatlal Gala Vs. ITO, ITA No.,5920/Mum/2013 v) Babulal C. Borana Vs. Third ITO, 282 TR 251(Bom) vi) Rajeev G. Kalathil Vs. DCIT, 67 SOT 52(Mum Trib) vii) CIT Vs. Nangalia Fabrics Pvt. Ltd., 220 taxman 17 (guj) viii) CIT Vs. Nikunj Eximp Enterprises pvt. Ltd., 216 taxman 171 ix) CIT Vs. M.K.Brothers, 163 ITR 249 x) ITO Vs. Premanand, 107 TTJ 395 xi) Arora Alloys Ltd., 370 ITR 372 8. We have considered rival contentions and carefully gone through the orders of authorities below. We had also deliberated on the judicial pronouncements referred by AO and CIT(A) in their respective orders as well as considered the ratio l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation from Sales Tax Department. The AO has not conducted any independent enquires for making the addition especially since the assessee has discharged its primary onus of showing books of account, payment by way of account payee cheque and producing bills for purchase of goods. From the record we found that the gross profit of the assessee has been consistently growing year after year which is depicted in the table below and which has been accepted by the Department: Assessment Year Sales Gross Profit GP Ratio 2008-09 21,59,13,671 2,06,07,377 9.54% 2009-10 30,70,57,145 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be concluded that purchases were not made by assessee - Held, yes [Para 71 [In favour of assessee. The above decision squarely applies to the case of the assessee as entire sales in case of assessee is made to the Government. 10. Hon'ble Chandigarh Tribunal in the case of ITO vs Arora Alloys Ltd (2012) (12 ITR (Trib) 263). This decision has been affirmed by the Punjab Haryana High Court in 370 ITR 372, wherein it was held as under:- Section 69C of the Income-tax Act, 1961 - Unexplained expenditure - Assessment year 2004-05 - Where addition on account of unexplained expenditure incurred for purchase of raw material was solely based on information received from Central Excise department, same could not be sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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