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TMI Blog2023 (9) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee as per audited accounts may be a relevant fact but the same is not suffice to meet the requirement of tax proceedings. Therefore find it appropriate to restrict the addition to the tune of 8% of total impugned sales which is sufficient to cover all possible leakage of revenue.Additions upheld by the ld. CIT(A) are substituted by the 8% of total alleged purchases. Appeal of assessee is partly allowed. - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER For the Assessee : Shri Rujesh Sinha, Adv. For the Revenue : Shri Om Prakash, Sr. DR ORDER PER CHANDRA MOHAN GARG:- The present appeal filed by the assessee for the assessment year 2016-17 is directed against the order of Ld. CIT(A)-6, Delhi dated 01.07.2019. It is pertinent to mention that earlier this appeal was dismissed ex-party by order dated 12.04.2022 and subsequently the miscellaneous application filed by the assessee was allowed in MA No. 153/Del/2022 by order dated 14.10.2022 and appeal was recalled. Now this is being adjudicated in presence of counsel of assessee. 2. The assessee has raised following grounds of appeal:- 1. On the facts and circumstances of the case, the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice 11. That the CIT(A) and AO have erred both on facts and in law in charging interest under sections 234A, 234B and 234C of the Act. The appellant craves leave to add to, alter, amend or vary the above grounds of appeal at or before the time of hearing. 3. As per ld. counsel of the assessee, the facts giving rise to the present appeal are that in this case return declaring an income of Rs. 14,160/- was filed on 23.09.2016 and was processed u/s 143(1) of the Income Tax Act, 1961 ( the Act ) on 01.10.2016. Thereafter, the Assessing Officer ( AO ) received information on 21.03.2017 from the Investigation Wing, New Delhi. On the basis of said report regarding accommodation entries of Rs. 4,53,940/- to M/s Shivji Garments (P.) Ltd. on 05.09.2015. Thereafter, the AO selected the case under compulsory scrutiny and notice was issued to the assessee u/s 143(2) of the Act. In response to the notice, Ld. Authorized representative of the assessee attended the proceedings. The AO noticed that during the year under consideration, the assessee had declared total turnover of Rs. 46,51,027/- from the business of sale/purchase of yarn from which total income of Rs. 14,160/- has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng stock and the opening stock emanating from the books of accounts have been duly accepted and thus in holding that the transaction as a colorable device despite the same having been done through proper banking channels, as shown by relevant documentary evidences. He vehemently pointed out that the addition on the basis of material collected at the back of the appellant and without providing an opportunity to rebut the same, thus, violating the principle of natural justice and relying on the certain statements recorded without providing an opportunity of cross examine the persons in violation of principle of natural justice. Ld. counsel placing reliance on the orders of ITAT Delhi in the case of Manoj Sharma vs. ITO reported as (2019) 103 taxmann.com 105 (Del Trib.) and order of ITAT Mumbai in the case of CIT vs Nikunj Eximp Enterprises (P) Ltd. (2013) 35 taxmann.com 384 (Bom) submitted that where entries in assessee s trading account including quantitative tally of purchases, opening stock, sales and closing stock were found to be correct no addition can be made on account of unexplained purchases. 7. The ld. counsel has also place reliance on the judgment of Hon ble H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the bank statement as well produce before the authorities below. The ld. Senior DR did not dispute that when the assessee was asked to produce director of M/s. Shivj Garments Pvt. Ltd. then the director of said company Mrs. Surbhi Chandra appeared and stated on oath and stated that the transaction of sale of fabric to the assessee is genuine and also stated there is no iota of any accommodation entry providing to the assessee. 10. The submissions made by the assessee before the Assessing Officer as well as ld. CIT(A) has been placed at pages 30 to 37 and 38 to 75 of assessee paper book. I find that the assessee before the ld. CIT(A) filed its financial statement for the year ending of 31st March 2016 wherein the assessee has shown sales/revenue from operation of Rs. 46,51,027/- and cost of material consumed/purchase of stock in trade has been shown as Rs. 44,61,060/- which is lesser than the impugned amount of purchases of Rs. 18,65,080/-. The assessee, before the ld. CIT(A) submitted copies of confirmations from all three entities and copies of relevant bills and ITR of M/s. Shivj Garments P. Ltd. assessee also filed stock statement, purchase and sale registers and bank st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no iota of evidence against the assessee before the authorities below that it has paid cash to the accommodation entry providers and in lieu of that received cheque showing bogus purchases and received commission against said transactions. In absence of any positive and adverse material against the assessee showing and establishing above facts, no addition can be made in the hands of assessee on account of allege bogus purchases u/s. 68 of the Act or any other charging section of the Act and on account of commission payment. 13. However, to cover up all possible leakage of revenue, I find it appropriate to follow the preposition rendered by Hon ble High Court of Bombay in the case of PCIT vs. Mohd. Hazi Adam (supra) and restrict the addition to the element of profit embedded therein. In my humble view the GP rate declared by the assessee as per audited accounts may be a relevant fact but the same is not suffice to meet the requirement of tax proceedings. Therefore keeping in view entire factual position and rival submissions of both the sides I find it appropriate to restrict the addition to the tune of 8% of total impugned sales which is sufficient to cover all po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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