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TMI Blog2024 (6) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... to ground nos. 1 & 2, CIT(A) has erred in dismissing appeal without deciding appeal on merit of the case properly and judicially. 4) Without prejudice to ground nos. 1 & 2, on the facts and in circumstances of the case CIT(A) has erred in confirming the disallowance of Rs.8,85,000/- made by the Assessing Officer by taking rate of 25% on amount of alleged bogus purchases of Rs.35,40,000/- without considering the facts and circumstances of the case properly and judicially. Hence, the assessee prays that the disallowance of Rs.8,85,000/- be deleted. 5) Without prejudice to ground nos. 1 & 2, on the facts and in circumstances of the case CIT(A) has erred in confirming disallowance of Rs.4,65,797/- made by the Assessing Officer out of interest on loans taken for business purposes shown in personal books of account without considering the facts and circumstances of the case properly and judicially. Hence, the assessee prays that the disallowance of Rs.4,65,797/- be deleted. 6) Without prejudice to ground nos. 1 & 2, on the facts and in circumstances of the case CIT(A) has erred in confirming addition of Rs.11,97,382/- made by Assessing Officer for alleged unexplained cash credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made a consequential addition of Rs.8,85,000/-. 9. Shri Siddharth Parakh, Ld. Authorized Representative (for short 'AR') for the assessee at the threshold submitted that though the authenticity of the aforesaid purchase transactions could not be substantiated by the assessee to the satisfaction of the A.O but the impugned addition, i.e., 25% of the value of the same so made by him was highly exorbitant. The Ld. AR had pressed into service the judgment of the Hon'ble High Court of Bombay in the case of Pr. Commissioner of Income Tax-17 Vs. M/s. Mohhomad Haji Adam & Company, ITA No.1004 of 2016 dated 11.02.2019. Elaborating further, it was submitted by the Ld. AR that as had consistently been held by this Tribunal by relying on the aforesaid judgment, the addition of unsubstantiated purchases was liable to be restricted only to the extent of difference/variance between the profit element of the genuine purchases vis-à-vis unsubstantiated purchases. The Ld. AR in support of his aforesaid contention had relied on the following case laws: (i) Ravi Kedia Vs. ITO, Ward, Bhatapara (C.G.), ITA No.111/RPR/2023 dated 25.05.2023 (ii) ITO-1(2), Raipur (C.G.) Vs. M/s. Satyanarayan N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be made to the extent of bringing the G.P rate of such purchases at the same rate as those of other genuine purchases. The Hon'ble High Court while concluding as hereinabove had observed, as under: "8. In the present case, as noted above, the assessee was a trader of brics. The A.O found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee 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 sale declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trade. The Tribunal, therefore, correctly restricted the additions limited to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany (supra) and considering the chart filed by the assessee at Page 158 of APB (culled out in the preceding paragraph of this order) as per which, addition ought to have been confined to an amount of Rs.1,62,307/- (supra). It may, however, be clarified that in the course of set-aside proceedings, the A.O shall verify the correctness of the details furnished by the assessee in the aforesaid chart (Page 158 of APB). 16. At the same time, as the assessee had declared under IDS, 2016 an amount of Rs.5,53,200/- which comprises of, viz. (i) peak bogus purchases claimed by the assessee to have been made from Shri Laxmi Agrotech : Rs.2,80,000/-, Page 150 & 158 of APB; and (ii) towards gross profit of his overall trading transactions during the year: Rs.2,73,200/-, therefore, the same would have a strong bearing while quantifying the addition that would be called for in the hands of the assessee in terms of my aforesaid observations. In order to telescope the aforesaid amount of Rs.5,53,200/- that was declared by the assessee under IDS, 2016, the declaration of the amount of peak purchases of Rs.2,80,000/- (supra) made by the assessee from Shri Laxmi Agrotceh (supra) would be excluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised a claim for deduction of interest expenditure of Rs.4,65,797/- on certain personal loans raised by him. On being queried, it was the claim of the assessee that though loans were raised in personal capacity but the funds received were wholly and exclusively used for the purpose of business. As the assessee had failed to substantiate his aforesaid claim, i.e., utilization of the interest bearing personal loans for the purpose of business, therefore, the A.O disallowed his claim for deduction of interest expenditure of Rs.4,65,797/-. 15. On appeal, the CIT(Appeals) finding no infirmity in the view taken by the A.O approved the same. 16. The Ld. AR rebutting the observation of the lower authorities submitted that the disallowance of the assessee's claim for deduction of interest expenditure was based on perverse observations. Elaborating further, the Ld. AR submitted that as no specific query was raised by the A.O on the aforesaid issue, therefore, no supporting documentary evidence to corroborate the aforesaid claim for deduction could be filed by the assessee before him. Apropos the proceedings before the CIT(Appeals), the Ld. AR submitted that as the assessee had in the mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonal loans. Thus, the Ground of appeal No.5 raised by the assessee is allowed for statistical purposes in terms of the aforesaid observations. (C) Addition u/s.68 of the Act : Rs.11,97,382/- 19. I shall now deal with the grievance of the assessee that both the lower authorities had erred in making/sustaining the addition of Rs.11,97,382/- made by the A.O u/s. 68 of the Act. 20. As is discernible from the assessment order, the A.O while framing the assessment observed that the assessee had raised fresh unsecured loans aggregating to Rs.11,97,382/- from three parties, as under: S. No. Name of the lender Amount of loan 1. Shri Sumit Sablani Rs.5,00,000/- 2. Shri Chand Sachdev Rs.1,97,382/- 3. S.K. Agency Rs.5,00,000/- Total Rs.11,97,382/- As the assessee despite sufficient opportunities failed to substantiate the identity and creditworthiness of the aforesaid lenders a/w. genuineness of the transactions on the basis of supporting documentary evidence; therefore, the A.O held the same as unexplained cash credits u/s. 68 of the Act. 21. I have heard the Ld. Authorized Representatives of both the parties as regards the issue in hand, i.e., susta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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