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TMI Blog2022 (2) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... lement embedded in such transaction is to be tax. In our view, when the assessee himself has shown profit at 6.67%, the disallowance @ 8% of such disputed purchases would meet the possibility of revenue leakage. Therefore, we direct the Assessing Officer to restrict the purchase @ 8% on both the disallowances - Appeal of the assessee is partly allowed. - ITA No. 495/SRT/2019 - - - Dated:- 8-2-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Hiren R. Vepari, CA For the Revenue : Ms. Anupama Singla,Sr-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of ld. Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rth of ₹ 7,30,390/- in cash. The Assessing Officer issued notice to the parties under section 133(6) of the Act and deputed inspector of his ward to conduct enquiry and to serve notice. The Assessing Officer recorded that inspector furnished his report that the said party was not available on the given address. The A.O. issued show cause notice to the assessee for disallowance of such purchases. The assessee filed his reply and stated and furnished the delivery challan of Raghuveer Jari. The Assessing Officer not accepted the explanation furnished by assessee by holding that inspector reported that Raghuveer Jari is not available on the given address. Further noted that assessee did not furnish confirmation and treated as bogus purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party-wise cash purchase books. The report of inspector with photographs shows that the address of sellers claimed by assessee is to be addressed of some other report of inspector with photographs that address claimed by assessee was the address of the parties from which the assessee made purchase in cash. Most of the existing shops at the location in occupation for more than 3 years. In some cases the shop No. mentioned by assessee was missing in the reported by inspector. The price of each saree of ₹ 4400 to 4500/-- per piece. The assessee made efforts to keep the purchase cost below ₹ 20,000/-. The invoice of all the parties were similar. On the aforesaid observation, the Assessing Officer disallowed the entire purchases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is possible that the parties might have changed their respective address. The inspector reported that some of the shops had closed down and some other parties could have been operating in the given address and disallowance of such purchases is not justified, the assessee explained the he made total purchase of ₹ 25,35,33,264/- and only purchase aggregating to ₹ 1,83,24,867/- made in cash. The remaining purchase of ₹ 23,52,04,151/- was made through cheques. The Assessing Officer accepted the cheque payments and cash payment was treated as non-genuine. The Assessing Officer accepted the sale but not accepted the said purchases. The Ld. CIT(A) after considering the submission of assessee held that assessee has shown purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) restricted the addition @ 25% following the decision of Hon'ble jurisdictional High Court in the case of Vijay Trading Co. (supra). Ld. AR of the assessee submits that assessee has not shown purchase from Raghuveer Jari or related parties transaction. 6. The Assessing Officer has not doubted the sale of the assessee, no sale is possible in absence of purchase. The books of account of assessee was not rejected. The Ld. AR of the assessee submits that the profit margin in the line of assessee s business is very low due to competitive in market. Ld. AR of the assessee submits that even if purchases are not verifiable due to lapse of time or non-availability of parties, the only profit element on such purchase is liable to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer made addition mainly on the ground that the parties were not available on the given addresses on the basis of reported of inspector of his ward. We find that the Assessing Officer neither rejected the books of account nor disputed the purchase of assessee. The assessee has shown turnover more than ₹ 25 crores and only the instances of cash purchase that too below ₹ 20,000/- was identified by Assessing Officer and treated as bogus purchases. The case of assessee before Assessing Officer as well as Ld. CIT(A) was that verification was after more than three years. And that the purchase shown by assessee is genuine. The Assessing Officer disallowed the entire purchases which was shown in cash. Similarly the entire purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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