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TMI Blog2024 (10) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... ing with regard to the documents submitted by the assessee explaining the source of cash deposits. The AO has made addition only for the reason that the assessee has not explained the purpose of which cash was withdrawn and also that when other modes of payment are available why the assessee needed cash. CIT(A) has given relief to the assessee after considering this fact and therefore we see no infirmity in the order of the CIT(A) deleting the addition made under section 68 - Decided against revenue. - Ms Padmavathy S, AM, And Shri Raj Kumar Chauhan, JM For the Revenue/ Appellant : Shri V.K. Chaturvedi, Sr. DR For the Respondent /Assessee : Shri Sumit Mantri, AR ORDER PER PADMAVATHY S, AM: This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [in short 'the CIT(A)'] dated 24.05.2024 for Assessment Year (AY) 2011-12. The Revenue has raised the following grounds: 1. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) was correct in restricting the addition made on account of bogus purchase to 10% of total bogus purchases ignoring the fact that the Sales Tax Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails of the parties and documentary evidences. (iii) The assessee has neither produced the stock register nor produced the records goods purchased from the said parties. (iv) The deduction of VAT in the Bill also does not bolster the case of the assessee. It is because of the fact that such deduction does not prove genuineness of a particular transaction in terms of supply of material. Such deduction is basically linked with the payment aspect only and cannot establish the purpose for which payment is made. (v) The production of invoice is of no help to the assessee, since in the activity or accommodation entry, such documents are meticulously maintained both by the entry provider and entry seeker. It is also not important whether the amount is small or big and whether the assessee is having loss or profit. There may be number of reasons for seeking the accommodation entry as it leads to generation of the cash in the hands of assessee. (vi) The onus was upon the assessee to prove the genuineness of the expenditure claimed as it was the assessee, which has made the claim. (vii) The Sales Tax Department being a statutory authority, has certified that the aforesaid parties ar. Havala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir profitability. b) By taking accommodation entry (where corresponding sale is there): In this case, the purchase I material is there but not at the cost which is shown in the books. This again can be done in many ways i.e. either by purchasing in cash from grey markets and taking accommodation bills from some entry operators or by entering into some arrangements with brokers/suppliers who provide the material at higher price than the market rate and difference amount after deducting commission is paid in cash to the party who have made the purchase and such cash receipts are not offered for taxation. The purpose accommodation entry is also the same le to reduce GP and generation of cash. c) Apart from above of some cases, the business entities are involved in cyclic entry, wherein both purchase and sale are bogus. The main motto is to increase the turnover. Therefore in the cases where bath purchase and corresponding sale is there and where purchases remains unverifiable possibility of leakage of Revenue can not be ruled out. 8.2 to 8.6.***** 8.7. Considering the facts of the case, the nature of business and failure of the assessee to prove the genuineness of the above purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. DR further submitted that the AO has considered the profit percentage of the assessee on genuine purchases and has correctly applied 12.5% as G.P. ratio on the non-genuine purchases. Therefore, the ld. DR submitted that the CIT(A) is not correct in reducing the GP percentage further to 10% and that the case law relied on by the CIT(A) in this regard is distinguishable on facts. With regard to addition made under section 68 of the Act, the ld. DR relied on the order of the AO. 7. The ld. AR on the other submitted that for the year under consideration, the assessee has disclosed G.P at 10.37% which is way higher than the Industries G.P. The ld. AR further submitted that the alleged bogus purchases are already part of the assessee's books of account and the G.P. rate is already part of the income declared by the assessee. Accordingly, the ld. AR submitted that adding a G.P. rate at 12.5% by the AO is not correct. With regard to the addition made under section 68 of the Act, the ld. AR submitted that the assessee has furnished the bank statements in support of the previous withdrawals to substantiate the source for subsequent deposits and this fact has not been questioned by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions of the Appellant. I have also perused the assessment order. It is observed from the assessment order that the AO has not doubted the cash withdrawals which are supported by bank statement. However, the AO has made the addition on the ground that there is no reason why should the Appellant be making withdrawals for the purpose of cash deposits. The AO has also raised concerns that why should the Appellant be indulging in cash transactions when there are other modes of non-cash transactions. In my considered opinion, once there are sufficient cash withdrawals to explain cash deposits, no addition can be made u/s 68 since the cash withdrawals explain cash deposits, unless and until, there are evidences on records that these cash deposits could be from any other sources, which is missing in the assessment order. In view of the same, I direct the AD to delete the addition made u/s 68 of the Act. Ground is, thus, allowed. 10. From the perusal of the findings of the AO with regard to the basis on which the addition is made (as extracted in the earlier part of this order) it is clear that the AO has not recorded any adverse finding with regard to the documents submitted by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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