9911796707
TMI Blog2017 (5) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... nd issuing notices under section 133(6) of the Act. When the payment to the concerned parties are through proper banking channel and there is no evidence before the Assessing Officer that the payments made were again routed back to the assessee, the addition made by estimating further profit of 12.5% earned by the assessee is not sustainable in law and facts. Keeping in view the totality of facts and circumstances of the case, we are inclined to restrict the addition to the extent of 2% of such purchases. - Decided partly in favour of assessee. - ITA No.3699/Mum/2016, ITA No.4276/Mum/2016, ITA No.4917/Mum/2016, And ITA No.4760/Mum/2016 - - - Dated:- 5-5-2017 - SHRI R.C.SHARMA, AM For The Assessee : Shri Neelkanth Khandelwal For The Revenue : Ms. Pooja Swaroop ORDER PER R.C.SHARMA (A.M): These are the appeals filed by the assessee against the order of CIT(A)-40, Mumbai dated 03/03/2016 for the Assessment Year 2009-10 in the matter of order passed u/s.143(3) r.w.s.147 of the Act. 2. The following grounds have been taken by the assessee:- ITA No.3699/Mum/2016 1. The Hon ble Commissioner of Income Tax (Appeals) 40, Mumbai (Hon ble CIT-A) erred o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act, 1961 is mandatory. The Appellant denies its liability for such interest. 4. The Id. CIT(A) erred in holding that the ground raised disputing initiation of penalty proceedings u/s.271(1)(c) is premature. The Appellant denies its liability for such penalty. ITA No.4917/Mum/2016 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the re-opening of the assessment U/s.14 7 of the Income Tax Act, 1961 made by the AO as the prescribed conditions therein are not satisfied. 2.a) On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the addition of ₹ 17,67,445/- made by the AO to the income of the Appellant on account of possible profit element @ 12.5% embeded in purchases made through alleged non-genuine parties on the basis of information of the Sales Tax Department about suspicious dealers having rejected the accounts u/s.145(3). b) The Id. CIT(A) failed to appreciate that :- i) all the purchases are genuine beyond doubt and supported by sufficient materials; ii) all the goods purchased from these parties have been backed by correspondin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable; iv] nothing has been brought on record by the AO that money has been exchanged in the hands in lieu of payment made for these purchases by account payee cheque; and v) the AO had neither provided copy of materials and statements relied upon by him nor allowed any opportunity to the Appellant to cross examine those parties who have been alleged to have provided the accommodation entries of such purchases. c) In reaching to the conclusion and confirming such addition made by the AO, the Id. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. d) Without prejudice, the rate or percentage of profit element embeded in such purchases as fixed by the AO and confirmed by the CIT(A) is excessive and unreasonable on the facts of the case. 3. The Id. CIT(A) erred in holding that levy of interest u/s.234B of the Income Tax Act, 1961 is mandatory. The Appellant denies his liability for such interest. 4. The Id. CIT(A) erred in holding that the ground raised disputing initiation of penalty proceedings u/s.271(1)(c) is prema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2016) and stated that facts of that case were similar to the case under consideration. 7. As per learned AR in the case of Jeetendra Harshadkumar Textiles (ITA/771 2211 / Mum/2011 dated 21-11-2012), similar issue was decided in favour of the assessee, that the decision of the Tribunal in the case of Jeetendra Harshadkumar Textiles was subsequently followed by the Tribunal to decide a similar issue in favour of the assessee in the case of M/s Pramit Textiles (ITA/3948 to 3953/Mum/2012 and ITA/4012 to 4015 and 4020 to 4021/Mum/2012 dated 01.10.2013) and Neeta Textiles(ITA/6138-40/Mum/2013,dtd. 27.05.2015). In the case of Nikunj Exim(supra)the Hon'ble Bombay High Court has dealt the issue of bogus purchases and corresponding sales as under : We have considered the submission on behalf of the Revenue. However, from the order of the Tribunal dated April 30, 2010, we find that the Tribunal has deleted the additions on account of bogus purchases not only on the basis of stock statement, i.e., reconciliation statement but also in view of the other facts. The Tribunal records that the books of account of the respondent- assessee have not been rejected. Similarly, the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut facts of the case are distinguishable as in that case the assessee is doing business in the state of Gujarat, whereas the present assessee is doing business in South Mumbai where competition is very high and profit margin range between 3 to 4%. In view of the assessee already declared gross profit of 4.55% in the books on the purchases, no further addition was warranted. 9. On the other hand, learned DR relied on the order of the lower authorities and contended that CIT(A) has very reasonably restricted the addition to the extent of 12.5% of alleged bogus purchases. 10. We have considered rival contentions and carefully gone through the orders of the authorities below. We have also deliberated on various judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us. From the record we found that the basis on which AO disallowed the alleged bogus purchases is the non-appearance of the suppliers before the AO to verify the purchases. In this regard we found that many Benches of ITAT and Hon'ble High Courts have held that when purchases are supported by sufficient documentary e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record to conclusively establish the fact that purchases are bogus. Merely relying upon the information from the Sales Tax Department or the fact that parties were not produced the Assessing Officer could not have treated the purchases as bogus and made addition. If the Assessing Officer had any doubt with regard to purchases made, it was incumbent upon him to make further investigation to ascertain the genuineness of the transactions. Without making any further enquiry or investigation the Assessing Officer cannot sit back and make the addition by simply relying upon the information obtained from the Sales Tax Department and issuing notices under section 133(6) of the Act. As the Assessing Officer has failed to make any enquiry or investigation to prove the fact that the purchase transactions are not genuine whereas the assessee has brought documentary evidences on record to prove genuineness of such transactions which are not found to be fabricated or non-genuine, the action of the Assessing Officer in ignoring them cannot be accepted. When the payment to the concerned parties are through proper banking channel and there is no evidence before the Assessing Officer that the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
