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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 ..... holly and exclusively for the purpose of business had been filed for the first time in the course of the proceedings before me, therefore, the matter in all fairness requires to be restored to the file of the A.O who is directed to re-adjudicate the issue after considering the aforesaid claim of the assessee in the backdrop of the additional documentary evidence filed by him. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee. Addition u/s.68 - AO while framing the assessment observed that the assessee had raised fresh unsecured loans from three parties - HELD THAT:- As assessee had in his application seeking admission of certain fresh documents as additional evidence placed on record confirmations of the lenders, copy of the returns of income, computation of income, bank statements, balance sheets of the respective lenders - As observed by me hereinabove, as there are certain justifiable reasons for the assessee in not filing the aforementioned documents in the course of the proceedings before the lower authorities, therefore, the same in all fairness and in the interest of justice are admitted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 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 credits u/s.68 without considering the facts and circumstances of the case properly and judicially. Hence, the assessee prays that the addition of Rs.11,97,382/- be deleted. 7) The appellant reserves the right to add, amend, or alter/withdraw any ground/grounds of appeal at the time of hearing. 2. Succinctly stated, the assessee who is engaged in the business of manufacturing of poha had e-filed his return of income for A.Y.2016-17 on 26.01.2017, declaring an income of Rs.6,46,410/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. Assessment was, thereafter, framed by the A.O vide his order passed u/s. 143(3) of the Act dated 29.12.2018 wherein income of the assessee was determined at Rs.31,94,589/- after, inter alia, making the following disallowances: Sl. No. Particulars Amount 1. Disallowance on account of bogus purchases Rs.8,85,000/- 2. Disallowance on account of interest on loans Rs.4,65,797/- 3. Disallowance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Nathulal, ITA No.178/RPR/2018 dated 31.05.2022 10. Per contra, the Ld. Departmental Representative (for short DR ) relied on the orders of the lower authorities. 11. I have given a thoughtful consideration to the issue in hand in the backdrop of the contentions advanced by the ld. authorized representatives of both the parties. As stated by the Ld. AR, and rightly so, the issue in hand, i.e., quantification of profit element qua the unsubstantiated purchases had been deliberated upon and adjudicated by the Tribunal by relying on 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 (supra) and the additions had been restricted to the difference/variance of the profit rate of genuine purchases vis- vis bogus purchases. The ITAT, SMC Raipur in the case of Ravi Kedia Vs. ITO, Ward, Bhatapara (C.G.), ITA No.111/RPR/2023 on the issue in hand had held as under: 14. Adverting to the quantification of the addition made by the A.O, I am of a strong conviction that now when the assessee had fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les in case of a trade. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66% Therefore, considering 5.66 % of Rs.3,70,78,125/- which comes to Rs.20,98,62 1.88 we think it fit to direct the revenue to add Rs.20,98,621.88 as gross profit and make necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) made by the assessee from Shri Laxmi Agrotceh (supra) would be excluded by the A.O while reworking out the addition in the hands of the assessee. Apart from that, as the assessee had already declared a gross profit of Rs.2,73,200/- for the year under consideration i.e. A.Y.2012-13 in his declaration under IDS, 2016, therefore, the addition, if any, that would be worked out by the A.O as regards the profit which the assessee would have made by procuring the goods in question at a discounted value from the open/grey market, as against the value booked in his books of accounts, i.e by restricting the addition to the extent of the difference between the gross profit of genuine purchases transactions and gross profit of bogus purchases transactions [excluding purchase of Rs.2,80,000/- (supra)] would be reduced on a prorata basis, i.e to the extent such gross profit is attributable to bogus/unverified purchase transactions vis- -vis total purchases made during the year. 17. Accordingly, on the basis of my aforesaid observations the matter is restored to the file of the A.O. Before parting, I may herein clarify that the A.O shall in the course of the set-aside assessment proceedings r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR submitted that as the assessee had in the memorandum of appeal specifically opted out of receipt of notices/communication from the CIT(Appeals) through e-mail, therefore, he had remained unaware about e-mail communication pertaining to the said proceedings before the first appellate authority and, for the said reason, could not dislodge the observations of the A.O before him. The Ld. AR in order to fortify his aforesaid claim took us through the memorandum of appeal in Form-35, Page 92-93 of APB. As the Ld. AR in the course of hearing of the appeal was directed to substantiate his aforesaid claim for deduction, thus, he had filed by way of additional evidence certain documents, viz. copy of ledger account of the parties from whom loans were borrowed and interest was paid, capital account of Ajay Poha Industries a/w. summarized version in the form of a chart in his attempt to substantiate his claim that interest bearing funds raised by way of personal loans were infused/pumped in for the purpose of the business of the assessee. For the sake of clarity, the chart filed by the assessee is culled out as under : 17. Having given a thoughtful consideration, I am of the view that as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the additions made/upheld by the lower authorities u/s.68 of the Act. Before proceeding any further, I may herein observe that the assessee had in his application seeking admission of certain fresh documents as additional evidence placed on record confirmations of the lenders, copy of the returns of income, computation of income, bank statements, balance sheets of the respective lenders, Page 32 to 58 of APB. As observed by me hereinabove, as there are certain justifiable reasons for the assessee in not filing the aforementioned documents in the course of the proceedings before the lower authorities, therefore, the same in all fairness and in the interest of justice are admitted. 22. On similar footing, as the aforementioned fresh documents were not available before the lower authorities and had been filed by the assessee before me for the first time, therefore, the matter in all fairness requires to be restored to the file of the A.O who is directed to re-adjudicate the issue after considering the aforesaid claim of the assessee in the backdrop of the aforesaid fresh documents filed by him. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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