9911796707
TMI Blog2012 (5) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO harboured any doubt concerning the GP rate earned by the assessee, it was well within his rights to investigate not only the rate and the quantity of the sales, but also the rate and quantity of the purchases, and to examine and compare the same with the market rate. AO has not doubted the sale value declared by the assessee. Rather, he has accepted the same to be genuine. Even so, after having done so, he applied the GP rate of 14 per cent without any basis and computed the value of the alleged unaccounted purchase, without even first ascertaining the market value of such purchases and without discharging his onus to establish that the assessee had paid anything over and above what had been stated in its books of account. The GP rate of 14 per cent was applied ignoring that of 50 per cent applied by himself in the cases noted in the preceding para. He did not even venture to differentiate those cases from the present one. CIT(A), while deciding this issue in favour of the assessee, in our considered opinion, has correctly appreciated the full factual as well as legal matrix, as discussed above. We find no error in the findings of the learned CIT(A) in this regard and we he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit, (ii) Identity of the creditors, and (iii) The creditworthiness of the creditor. The burden to show that all the three conditions/characteristics are satisfied is on the assessee. But in every case of application of section 68, the nature and source of sum found credited has first to be examined. In the present case, the AO has not said anything on the nature of the credit appearing in the books of account. It (sic) has also not recorded any finding as to source of these credits. In the view of the AO and of learned CIT(A), the purchases were bogus and, therefore, there is no question of any sale or export. The credit entries have, therefore, been taken to be bogus for the purposes of section 68. Above approach of the Revenue authorities cannot be accepted. In our considered opinion, it was necessary to examine nature of the entries and thereafter explanation of the assessee, if any, furnished relating to the credit entries. It appears to us that without examining above important aspect and without recording a proper finding thereon, provision of section 68 has not been properly applied. There is no gainsaying that credit in books can be treated as deemed income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 13. In the light of above discussion, we are of view that this case should be remitted back to the AO for re-examination and application of s. 68 of the IT Act in the light of our observations made above. During the course of re-examination, it may be necessary to again calf witnesses connected with the purchases shown by the assessee. Having regard to the finding that whereabouts of such witnesses are not known, the Revenue authorities will do well to handover Dasti summons to the assessee, if request is made by the assessee to call the witnesses for his examination. The complaint of the assessee relating to observation of violation of principle of natural justice should also be examined during the course of fresh hearing by the Revenue authorities. Other grounds are linked with the main addition discussed above. Therefore, orders on those grounds are also remanded to the AO for re-examination and for fresh considerations in accordance with law. For the aforesaid reasons, impugned orders are set aside and matter restored to the file of the AO." 3. On remand, as above, the AO took up the proceedings as directed by the Tribunal and vide his order dated 31-12-2009, which is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and law. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made of ₹ 3,69,58,000 made under section 69C of the IT Act being the unexplained expenditure incurred on purchase. 2.1 The learned CIT(A) ignored the findings recorded by the AO and the fact that the assessee is involved in the business of receiving bogus purchase entries to inflate profit for claiming deduction under section 80HHC of the Act. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made of ₹ 3,85,752 made under section 69C of the IT Act being the unaccounted cash paid as commission for obtaining bogus purchase bills. 3.1 The learned CIT(A) ignored the findings recorded by the AO and the fact that the assessee is involved in the business of receiving bogus purchase entries to inflate profit for claiming deduction under section 80HHC of the Act. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made of ₹ 16,816 made on account of interest on FDR. 4.1 The learned CIT(A) ignored t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 68 of the Act, in respect of unexplained credits on account of export sales. In this regard, our attention was invited to the assessment order passed in the original proceedings and the directions given by the Tribunal, wherein the issue was regarding the nature of receipts which the assessee has claimed to be export sales, whereas the AO had treated the same as unexplained receipts and added the same as income of the assessee, by invoking the provisions of section 68 of the Act. Para 12 of the Tribunal order was referred to, wherein, it has been observed that : "The sale receipts have been treated as bogus as purchases were bogus and assessee was dealing with people indulging in giving Hawala entries only. This was done without examining the nature of the credit entries and without providing reasonable opportunity to the assessee to explain those credit entries. The explanation of the assessee relating to the credit entries has not been examined at all. There is no doubt that burden of proof to prove that credit entries are genuine, is on the assessee. But the question of discharge of burden is required to be decided on examination and appraisal of material availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a proper finding thereon, provision of section 68 has not been properly applied. There is no gainsaying that credit in books can be treated as deemed income of the assessee and, therefore, it is necessary to concentrate on the credit, its nature and source. We are unable to say that inference of no sale or export cannot be drawn if the purchases are held to be bogus. But if assessee has shown sales and sale consideration is claimed to have been received through the banking channels with names and addresses of parties who purchased goods and remitted the amount, it will not be proper to hold credits as bogus without examining the credit entries and the background of the creditors. The genuineness or otherwise of the credit entries has to be examined. It is not uncommon to see that trading accounts of the assessee rejected with part or whole of purchases are found as ingenuine. In those cases, disallowance is made out of the purchases. If purchases partly or wholly are not genuine, then appropriate disallowance is to be made. Entire ingenuine purchases can be disallowed and sales can be subjected to tax depending upon the facts and the circumstances of the case. In other cases some r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Departmental Representative, on the other hand, supported the order of the CIT(A). As per the learned Departmental Representative, once the matter has been set aside by the Tribunal and no restrictions have been placed, the AO will be within his rights to examine the issue from his own perspective afresh and in the present case, having found that the exports were genuine, the AO was well within his rights, thereafter, to find out the source of such exports; that in this view of the matter, he was justified in going beyond the requirements of the provisions of section 68 of the Act and making enquiry to find out the source of such exports; and that thus, the CIT(A) was justified in rejecting the contention of the assessee on this count. 14. We have heard the parties qua the cross-objections and have perused the material brought on record. 15. In the original assessment, vide assessment order dated 31-3-2004 (assessees paper book 185-204), the AO, invoking the provisions of section 68 of the Act, added the entire amount of ₹ 4,29,74,424, representing the assessees stated export sale proceeds. This was done by observing that the purchases of ₹ 1,93,87,608, stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transgressed the directions issued by the Tribunal. He, however, accepted the assessees grievance against the addition under section 69C of the Act, made on account of alleged undisclosed purchases. 21. Respectively aggrieved thereby, both the parties are before us by way of the Departments appeal and the assessees cross-objections. 22. The first issue up for determination is that raised in the assessees CO. Nos. 1 to 4, id est, whether the learned CIT(A) is correct in confirming the AOs action of travelling beyond the directions issued by the Tribunal, thereby setting up an entirely new case against the assessee by invoking and making addition under the provisions of section 69C of the IT Act, which had never, at any stage, been the case of the Revenue in the first round of assessment. 23. The directions of the Tribunal, as contained in its order dated 12-9-2008, it is seen, are as follows :, "10... The pertinent question there (sic) is whether on the facts and circumstances of the case, the application of section 68 is justified. There is small (sic) objection of the assessee that material used against the assessee was not put to the assessee in accordance with law. 11... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot genuine, then appropriate disallowance is to be made. Entire ingenuine purchases can be disallowed and sales can be subjected to tax depending upon the facts and the circumstances of the case. In other cases some reasonable amount may have to be allowed as deduction towards purchases. The present case where purchases were held to be bogus, those could have been disallowed. But that has not been done and alleged sales assessed under section 68 of the IT Act. 12. The sale receipts have been treated as bogus as purchases were bogus and assessee was dealing with people indulging in giving Hawala entries only. This was done without examining the nature of the credit entries and without providing reasonable opportunity to the assessee to explain those credit entries. The explanation of the assessee relating to the credit entries has not been examined at all. There is no doubt that burden of proof to prove that credit entries are genuine is on the assessee. But the question of discharge of burden is required to be decided on examination and appraisal of material available on record. The present case was decided without such appraisal and without considering the question with referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not open to him to introduce into the assessment new sources of income so as to enhance the assessment; and that any power to enhance is confined to the old sources of income which were the subject-matter of appeal before the Tribunal. Sri Gajalakshmi Ginning Factory Ltd. v. CIT (1952) 22 ITR 502 (Mad) was applied, holding that: "It is not necessary for us to enter into a detailed discussion of the questions raised in view of the fact that the addition of ₹ 54,075 made by the ITO was from a new source and this he was not competent to do. In Sri Gajalakshmi Ginning Factory Ltd. v. CIT (1952) 22 ITR 502 (Mad), the learned Judges observed that it would not be open to the AAC to introduce into the assessment new sources as his power of enhancement was restricted only to the income which was the subject-matter of consideration for purposes of assessment by the ITO. We are of the view that on remand by the Tribunal, it was not open to the ITO to introduce into the assessment new sources of income so as to enhance the assessment. His power to enhance, if it existed, was confined to the old sources of income which were the subject-matter of appeal to the Tribunal." 27. In the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessed by the ITO in the original order of assessment and not disclosed either in the return or in the assessment order, it is difficult to appreciate as to how the ITO could assume jurisdiction to tax that new source of income while making a fresh assessment in pursuance of an order of remand by the AAC." 29. In the case before us too, as observed hereinabove, the remand ordered by the Tribunal was specifically limited to examine the credit entries of the assessee. The AO, in the order passed pursuant to the remand, by invoking the provisions of section 69C of the Act and making addition thereunder, which had not been done in the original assessment, has clearly gone beyond these precise directions of the Tribunal, which is legally impermissible. 30. In Basudeo Prasad Agarwalla (supra), the thrust of the argument of the assessee, as observed by the Hon'ble High Court, was that after the decision of the appeal sending the matter on remand, the scope of the AO had become limited and he could not, after remand, take any effective action beyond the scope of the order of the appellate authority; and that such an action after the order of remand would be unwarranted and uncalled f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (All), wherein, it was held that where the order of the AAC is specific, it is not open to the ITO to conduct a fresh enquiry beyond the said directions and to proceed to make a fresh assessment without reference to the earlier assessment. 32. S.P. Kochhar (supra), in this regard, in fact, goes to the extent of holding that: "... When the Tribunal sets aside the assessment and remands the case for making a fresh assessment, the power of the ITO is confined to the subject-matter of appeal before the Tribunal. He cannot take up the questions which were not the subject-matter of appeal before the Tribunal, even though no specific direction has been given by the Tribunal." (Emphasis, italicized in print, ours). 34. On perusing the specific directions issued by the Tribunal, we find no force in the stand taken by the Revenue that no fetters were placed on the AO by the Tribunal and that in the second round, the AO was justified in making the addition under section 69C of the Act, as opposed to the addition made invoking the provisions of section 68 in the original assessment proceedings. The above-discussed judicial pronouncements lay down a clear mandate that where the directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 69C of the Act, being the unexplained expenditure incurred on purchase and of ₹ 3,85,752 made under section 69C of the Act, being the unaccounted cash paid as commission for obtaining bogus purchase bills; and that while doing so, the learned CIT(A) has wrongly ignored the findings recorded by the AO and the fact that the assessee is involved in the business of receiving bogus purchase entries so as to inflate its profit for claiming deduction under section 80HHC of the Act. 41. The learned Departmental Representative has stated that the CIT(A) was not justified in deleting the addition made by the AO. According to him, the AO had carried out the investigation as per the directions of the Tribunal and in this process, he recorded the statement of Shri Sanjay Parekh, proprietor of M/s Mine-O-Gems. The learned Departmental Representative contended that the AO has given cogent reasons in the assessment order to hold that the two concerns, i.e., M/s Mine-O-Gems and M/s Vinayak Overseas, were only paper concerns and they had not done any business whatsoever. He further submitted that having held that the purchases declared by the assessee in its books of account were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the order of the CIT(A). It was submitted that firstly, the finding given by the AO that M/s Vinayak Overseas and M/s Mine-O-Gems are not genuine firms, is perverse. In this regard, he has referred to pp. 142 and 143 of the assessees paper book, which is a copy of the return filed by one Mr. Gauri Shankar Parekh, proprietor of M/s Vinayak Overseas, to assessees paper book pp. 136 to 138, being copies of invoices issued by M/s Vinayak Overseas and to assessees paper book 140 and 141, i.e., copy of the confirmation. He also referred to the order passed by the Tribunal B Bench, Jaipur in the case of M/s Vinayak Overseas, a copy whereof is placed at assessees paper book 265 to 282. He invited our attention to the finding of fact recorded by the Tribunal at assessees paper, book 274, wherein it has been observed that the assessee in that case, i.e., Vinayak Overseas, had made a huge import of goods during the year and in the subsequent years and these imported goods had been sold in India and accordingly, the sale against such imported goods could not be a mere paper entry. 45. Further, the learned counsel for the assessee referred to the fact that in the assessment year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot genuine, is not correct. It was submitted that the learned CIT(A) has properly appreciated the facts brought on record and that these facts have not been disputed by the learned Departmental Representative. 49. As regards the invocation of section 69C of the Act for making the addition of the so-called unaccounted purchases, it was submitted on behalf of the assessee, that there was absolutely no material with the AO to show that the assessee had made any purchase outside its books of account; that the assessee had submitted the audited balance sheet and the P&L a/c and the fact that export has been made stands accepted by the AO; that the AO has assumed the GP rate of 14 per cent without giving any comparable case and without giving any justification for applying the said rate of 14 per cent; that on the other hand, the assessee has produced all the purchase bills and also all the sales bills; that the export of diamonds is through the Customs Department, which approves the value of these diamonds; that the AO has wrongly made the assumption merely on surmises and conjectures, even though there is absolutely no basis whatsoever brought out by the AO to disregard the book resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and without discharging his onus to establish that the assessee has paid something over and above what has been stated in its books of account. In support of this proposition, the learned counsel for the assessee invited our attention to the copies of the export invoices and other documents placed at assessees paper book 46 to 78, giving the description of each of the items exported, as verified by the customs authorities at the time of export and the certificate of the same regarding valuation by the customs cargo appraiser have been marked. 50. The learned counsel for the assessee invited our attention to the invoices issued by M/s Vinayak Overseas in respect of the items exported by the assessee (assessees paper book 136 to 138) and invoices issued by M/s Mine-O-Gems (assessees paper book 149 to 152). In this regard, it was contended that the exact specifications of the items purchased with the rates and quantity have been stated in these purchase invoices; that the specification and the quantity as stated in the purchase invoices match with the specification and quantity stated in the export invoices; that the AO has accepted the export sales as genuine and he has also accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the present case, the assessment order does not evince the presence of any material whatsoever with the AO to show that the assessee had actually incurred any expenditure on purchases outside its books of account. The assessee had, on the contrary, furnished all its purchase as well as sale bills. It was shown that the export of diamonds made by the assessee had been through the Customs Department, which Department is the Department responsible for approving the value of diamonds to be exported. The audited balance sheet and the P&L a/c had been produced before the AO by the assessee. The factum of export, in fact, was accepted by the AO by observing in the assessment order that: "... however, I do agree with the findings of the AO made therein except the part of addition, i.e. addition made under section 68 of the Act of the sales amount of ₹ 4,29,74,424." However, he ignored the source of the purchases, even though adequately explained by the assessee. As such, without giving credit of such source of the expenditure incurred, the AO wrongly assumed that unaccounted expenditure had been incurred by the assessee. That this was merely a baseless assumption of the AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of the alleged unaccounted purchase, without even first ascertaining the market value of such purchases and without discharging his onus to establish that the assessee had paid anything over and above what had been stated in its books of account. The GP rate of 14 per cent was applied ignoring that of 50 per cent applied by himself in the cases noted in the preceding para. He did not even venture to differentiate those cases from the present one. 55. In this regard, it is seen that the copies of the export invoices and other documents placed at assessees paper book 46 to 78, contain the description of each of the items exported, as verified by the customs authorities at the time of export and the certificate given by the customs cargo appraiser certifies the valuation of the material exported. 56. The copies of the invoices issued by M/s Vinayak Overseas in respect of the items exported by the assessee are to be found at assessees paper book 136 to 138 and the copies of the invoices issued by M/s Mine-O-Gems are at assessees paper book 149 to 152. These vouchers were duly furnished by the assessee before the AO. These purchase vouchers contain the exact specifications of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncern M/s Vinayak Overseas. Assessees paper book 140 and 141 is the confirmation. 60. Further, assessees paper book 265 to 282 is a copy of the order dated 30-5-2008, passed by the Tribunal, B Bench, Jaipur in the case of Gaud Shankor Pareek in ITA Nos. 223/Jp/2007 to 229/Jp/2007 filed by the assessee for assessment years 1998-99 to 2004-05 and ITA Nos. 365/Jp/2007 to 371/Jp/2007, the corresponding cross-appeals filed by the Revenue. The Tribunal has observed therein (at assessees paper book 274), that the assessee in that case, i.e., Gauri Shankar Pareek, proprietor of M/s Vinayak Overseas had made a huge import of goods during the year and in the subsequent years and the imported goods had been sold in India and that accordingly, the sale against such imported goods could not be dubbed as a mere paper entry. The assessment order in that case, inter olio, mentioned that in the assessment year under consideration, M/s Vinayak Overseas had made import of ₹ 33,49,51,369. The conclusion arrived at by the AO has been found by the Tribunal to be contrary to the facts (assessees paper book 275 and 276). The Tribunal observed (at assessees paper book, pp. 279 and 280), that it cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney, section 69C does not apply. Reference in this regard has been made to the two judgments of the Delhi High Court and one of Tribunal, Chandigarh Bench to contend that unless it is shown that expenditure was actually incurred, section 69C has no application. It was contended that the AO on his part has done nothing to demonstrate that purchases to the extent of ₹ 3,69,58,004 were made which were not recorded in the books of account and for which the source was not explainable. It was, thus, contended that even on merits, there can be no warrant for making such an addition. 6.6 On a careful consideration, I find that the provisions of section 69C may be invoked only in situations where the AO finds that any expenditure has actually been incurred by some assessee and for which he/she does not have any satisfactory explanation. The Hon'ble Delhi High Court in the cases of CIT v. Lubtec India Ltd. (2009) 311 ITR 175 (Del) and CIT v. Ved Prakash Choudhary': (2008) 305 ITR 245 (Del) has held that it has first to be established by corroborative evidence that an expenditure has been incurred and only thereafter if the explanation offered by the assessee about the source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k are assessed to income-tax and sales-tax and both of them have responded to the notices issued by the AO. Thus, the claim of the appellant is that the onus cast upon it has been duly discharged insofar as proving the existence and identity of the sellers and the genuineness of purchases is concerned. 6.9 Further, in the course of appellate proceedings, the learned counsel for the appellant has invited my attention to the judgment of the Hon'ble Tribunal, Jaipur A Bench in ITA No. 26/Jp/2005 in the case of Prakash Chand Vijay v. Dy. CIT wherein the Hon'ble Tribunal Jaipur has accepted GP rates of 49.8 per cent and 55 per cent for the asst. y₹ 2001-02 and 2002-03 as reasonable. Copy of the aforesaid order has been filed before the AO and the under-signed. Further, the appellant has also pointed out that in the case of Gauri Shankar Pareek, proprietor of M/s Vinayak Overseas, the Hon'ble Tribunal, Jaipur has categorically held that Shri Pareek was genuinely engaged in the business of import and export and trading of precious and semi-precious stones and there was no material with the AO to come to the conclusion that he was only issuing bogus bills on commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 194 to 197). The statement on 19-5-2004 was recorded in the presence of Shri Mohan Prakash Sharma and part of the statement before the customs authorities are in the handwriting of Shri Mohan Prakash Sharma. All these statements were recorded under section 108 of the Customs Act. The assessee therein had stated that he had made the delivery of goods against the sales in all the cases. Of course the AO was right in his observation that the statements given before the custom authorities are not binding to him under the income-tax proceedings but it is also correct to say that those statements recorded by another authority of the Government of India cannot be totally ignored without having adverse material with the AO to disbelieve the same. It is also worth noting that during the year and in subsequent years the assessee had made huge imports of goods. This fact has also not been denied by the opposite side that the customs authorities prepare bill of entry in case of each import and the import is always coupled with physical delivery of goods. The claim of the assessee that he had sold the imported goods in India under these circumstances cannot be doubted. The details of goods impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods purchased, sales-tax registration numbers of the parties, PANs, their confirmations and bank statements showing the debit of the amount paid through account payee cheques to them in the account of assessee and credited in the bank account of sellers, had discharged its primary onus. And thereafter the onus shifted on the Department to rebut the same. At one hand there are sufficient documents as discussed above with the assessee to support its claim that goods were purchased from the aforesaid parties and so far as existence of those parties and that they were not in the business of selling of the goods supplied to the assessee as observed by the AO is concerned, we find from the record itself that a search operation under s. 132 in the case of M/s Vinayak Overseas was conducted by the Department. Shri Sanjay Pareek, proprietor of M/s Mine-O-Gems and director of Sahil Diamonds (P) Ltd. was produced before the AO who admitted the transaction, Shri Om Prakash Ghiya, proprietor, M/s Anmol Ratan and Shri Umesh Kumar Saboo worked for M/s Shruti Gems as brokers also appeared before the AO. Thus, it cannot be accepted beyond doubt that the aforesaid five parties were not in existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act was also conducted at the premises of Shri Gauri Shankar and his business concerns, M/s Vinayak Overseas. The assessment in the case of the appellant company was also primarily based on the information received from Investigation Wing, Jaipur that Shri Gauri Shankar Pareek and Shri Sanjay Pareek were indulging in issuing bogus sale bills against commission and the appellant company had also taken advantage of such accommodation bills. Therefore, the judgment of the Hon'ble Tribunal in the case of Gauri Shankar Pareek is an important development and should have been taken note of by the learned AO. As stated by the learned counsel for the appellant, Shri Gauri Shankar Pareek has made all the relevant documents available to the AO through registered post. 6.11 Further, as stated earlier, a search under section 132 of the IT Act was conducted at the premises of the appellant company and its directors. However, no adverse material and incriminating evidence was found during the said search operation and the block assessment for the period 1-4-1996 to 12-2-2003 has been completed at nil income. 6.12 Thus, no evidence suggesting any purchase from the so-called unknown parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g s. 69 was to confer a discretion on the ITO in the matter of treating the sources of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as not under s. 69 has to be considered in the light of the fact of each case. In other word, a discretion has been conferred on the ITO under s. 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. In the instant case, the Tribunal has held the discretion had not been properly exercised by the ITO and the AAC in taking into account the circumstances in which the assessee was placed and the Tribunal has found that the sources of investments could not be treated as income of the assessee. The High Court has agreed with the said view of the Tribunal. We also do not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of preponderance of probabilities, one has to weigh the evidence and material on record in view of facts and circumstances of that very case. The learned Departmental Representative has also placed reliance on several decisions of Hon'ble Courts including the decision of Jaipur Bench of the Tribunal in the case of Kanchwala Gems. In all these cases, including the Hon'ble jurisdictional High Court in the case of Indian Woollen Carpet Factory v. ITAT (2002) 178 CTR (Raj) 420, a well established position of law that onus lies on the assessee to prove the genuineness of the claimed purchases, has been reiterated. Thus, while deciding an issue as to whether the claimed purchase is genuine or not it is undisputedly to be seen as to whether the assessee had discharged its burden by bringing evidence in support of the claim or not. Thus, ultimately the facts and circumstances of that very case and the evidence produced by the parties in support of their case are material for the adjudication of the issue of genuineness of the claim of the purchase." 6.15 The AO has also made an observation that the exorbitant rate of profit of 55.12 per cent is just impractical and im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by the assessee. The Hon'ble Guwahati High Court.... No evidence has been brought on record by the AO that the assessee, who had admittedly exported the goods has indeed purchased the goods not from the above three named parties but from some other parties and the amount paid to above three parties was ultimately returned by them to the assessee. In the absence of these material evidences, the AO under the provisions of section 69C of the Act, has failed to discharge her onus to justify the addition in question, especially when no defect has been pointed out in this regard in specific words in the books maintained by the assessee. The ground is, thus, decided in favour of the assessee with the direction to the AO to accept the claim of the assessee and delete the addition. 6.16 In addition to the above, the learned counsel has also submitted that in the cases of Jaipur Gem Exports, Gopalji Ka Rasta, Jaipur and Badhahas of Jaipur, GP rates of 58.46 per cent and 45 per cent respectively have been held to be reasonable by the AO himself. 6.17 In view of the above facts and under the circumstances, there is no merit in the claim of the learned AO that the GP rate in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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