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TMI Blog2024 (2) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission and has failed to provide any documents showing that AY Palace DMCC, has actually rendered commission services to procure buyers for assessee company without any documentary proof of services rendered by AY Palace DMCC, the commission paid by asssesse company cannot be confirmed to be legitimate. The Assesse company also failed to provide contra-confirmation from the customers regarding services rendered by AY Palace DMCC. The invoices raised by the various parties as provided by the assessee company also make no mention of AV Palace DMCC that has allegedly served to connect them to the assessee company. In absence of any documentary proof of services rendered by AV Palace DMCC, a sum of hundred percent of the commission payment of Rs.3,20,77,873/- is hereby disallowed and added back to the income of the assessee company. Penalty proceedings u/s 270A(8) of the .T. Act, 1961 for misreporting of income are also separately initiated (Addition:Disallowance of commission payment amounting to Rs.3,20,77,873/-) .... 4.4.1 The assessees reply was perused. And kept on record but is not acceptable. The assessee company has deducted TDS on the commission-pad to agents and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana Corporation Ltd. and yet the assessee company, despite multiple opportunities, has not been able to produce a single document that can prove that the 296 kgs of gold and jewellery actually were transported to the assessee's facility and were put to use by the assessee. 4.6.2.1 Even the invoices provided by the assessee are very sketchy and vague in nature that do not even mention the details of items for which the invoice is being raised (despite the details being exhaustively mentioned in the terms and conditions of the auction sale). This is completely counter to the prevalent practices in the gold & jewellery sector where even small quantity items ate itemized and billed in detail. Even the status of payment or bank statements have not been provided by the assessee in response to the show cause notice to support its claim nor has the assessee company pointed out the corresponding sales made through the relevant stock ledgers. Also, significantly, Surana Corporation Limited has not even filed its Incometax return for AY 2020-21 or AY 2021-22 nor has responded to the notice issued u/s.133(6) by this office to confirm the transactions with the assessee. Therefore, in abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission of Rs.81,00,000/- and purchases made for a Sum of Rs.234,15,30,188 was wrongly disallowed in the impugned Assessment Order dated 28.12.2022 under section 143(3) r.w.s 144B on 28.12.2022 and a demand of Rs.75,63,06,260/-has been wrongly raised. Hence, the present Writ Petition. 10. The learned Senior Counsel for the petitioner submits that in the notice issued to the petitioner under Section 142(1) of the Income Tax Act on 07.11.2022, , the petitioner was called upon to furnish the following : - ANNEXURE The following accounts or documents or information is/are sought under Section 142(1) of the Income-Tax Act, 1961. 1. Please furnish a detailed note on the business activities carried on during the FY 2020-2021. 2. Furnish the computation of income along with the details of income earned by you under various heads during the previous year relating to AY 2021-2022. 3. Please provide copy of balance sheet, audit report, P&L account and any other relevant financial statements for the AY 2021-2022. 4. Party wise details of all suppliers for goods and expenses (Name, Complete address, PAN) 5. Sample Invoices of all purchases 6. Bank statements highlighting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that even though, the petitioner was not called upon to furnish e-way bills and LR receipts for purchase of Bullion and Gold Jewellery, in the Impugned Order, the Assessing officer has concluded that these were "unexplained expenses" on the assumption that the petitioner has not proved that they were genuine purchase transactions and that the petitioner has also not proved the actual transportation of these goods. 18. The learned Senior Counsel for the petitioner further adds that the purchase from M/s.Surana Corporation Limited was both gold jewellery and gold bullion, whereas, purchases from the other two companies namely M/s.Shiv Sahai & Sons (India) Private Limited and M/s.Diamond India Limited were gold bullion. It is therefore submitted that the question of producing the e-way bills and lorry receipts did not arise under law. 19. It is submitted that question of furnishing Income Tax Returns of the seller as demanded order/notice dated 29.11.2022 also cannot be countenanced as the seller will not disclose the same to the petitioner. 20. The learned Senior Counsel for the petitioner submits that it is open for the Department to obtain necessary information by sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without distributing the sales in case of a trader." 26. The learned senior counsel for the petitioner submits that in case the expenses were to be disallowed, the profit made from the sale of goods for the corresponding amounts also has to be disregarded. 27. Defending the Impugned Orders, the learned Senior Standing Counsel for the respondent submits that the impugned order is well reasoned and requires no further interference. 28. The contention of the learned Senior Standing Counsel for the respondent is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Response type (Full/part/a djournment) 143(2) 28.06.2022 13.07.2021 Not received 142(1) 02.08.2022 12.08.2022 Not received 142(1) 07.11.2022 11.11.2022 Received 10.11.2022 Full 142(1) 11.11.2022 16.11.2022 Received 12.11.2022 Part 142(1) 29.11.2022 06.12.2022 Received 06.09.2022 Adjournment 142(1) 07.12.2022 09.12.2022 Received 09.12.2022 Part SCN u/s. 143(3) 12.12.2022 16.12.2022 Received 15.12.2022 Part 36. It is further submitted that mere filing of GST returns of the seller is not sufficient to prove that they were genuine sales transactions with the petitioner. 37. It is submitted that even if it is to be believed there was sales transactions, the petitioner failed to produce the list of the customers and the details of the sellers showing that the transactions claimed by the petitioner had been duly declared in their audited books. 38. It is further submitted that the respondent made disallowance of purchases and the consequential debits in the Profit and Loss Account only after providing several opportunities to the petitioner to which the petitioner failed to offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is further submitted that the respondent did not consider the statutory documents like from 15CB, payment advise issued by bank, invoices, party confirmation, ledger accounts and other documents filed in support of the commission paid to the foreign party M/s.AV Palace DMCC. 46. It is further submitted that the respondent has rejected the statutory documents i.e. from Form 16, bank statements, stock register, invoices, statutory forms i.e. GSTR-2A, ledger accounts, party confirmations and evidences and explanations, filed in respect of the commission paid to the local parties. The learned counsel further submitted that the respondent has failed to consider the tender and auction documents and other evidences in support of purchase of materials from the said three companies. 47. It is further submitted that the respondent has failed to appreciate that M/s.Surana Corporation Limited is undergoing liquidation and hence the erstwhile directors of the company would not be in a position to respond to notices issued under Section 133(6) and hence submitted that, the impugned order is liable to be set aside. 48. I have considered the arguments advanced by the learned Senior Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent. These documents have not been furnished by the petitioner. 55. That apart, the other issues regarding payment of commission to both Indian and Foreign agents have not been properly explained by the petitioner. There are several dispute question of facts who do not call for adjudication in a summary proceedings under Article 226 of the Constitution of India. 56. Therefore, there are no valid grounds to interfere with the impugned assessment order dated 28.12.2022 passed under Section 143(3) r/w 144B of the Income Tax Act, 1961 for the Assessment Year 2021-22 in W.P.No.5120 of 2023. 57. Thus, W.P.No.5120 of 2023 is liable to be dismissed. Consequently, the challenge to the impugned order passed under Section 270(A) of the Income Tax Act, 1961 which flows from the impugned assessment order dated 28.12.2022 impugned in W.P.No.5120 of 2023 has to also fail. Therefore, W.P.No.20853 of 2023 is also liable to be dismissed. 58. However liberty is given to the petitioner to file a statutory appeals before the Appellate Authority both against the impugned assessment order dated 28.12.2022 passed for the Assessment Year 2021-22 under Section 143(3) r/w 144B of the Income Ta ..... 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