9911796707
TMI Blog2013 (4) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... il Mills Group of Patan district and agents / brokers of Mehsana and Sabarkantha district of Gujarat on 1.9.2008 and subsequent dates. Survey action U/S. 133A of the IT. Act was carried out in the case of the appellant on 1.9.2008. The appellant - Jagdamba Ginning Factory - is partnership concern having the following partners: Name Percentage Share in partnership 1. Navinbhai Jamnalal Soni , 10% 2. Sachinbhai Navinbhai Soni 10% 3. Hansaben Navinbhai Soni 14% 4. Dineshbhai Jamnalal Soni 15% 5. Madhuben Dineshbhai Soni 51% As per Audit Report in form no. 3CD filed with the return the business is ginning and pressing of Cotton. The appellant also sells cottonseeds and cotton as stated in the statement of Navinbhai J. Soni recorded during the survey operation. has been stated in the assessment order in para 3.1 that during the course of search and survey proceedings in the case of Edible Oil Mill Group, it was noticed that one M/s. Vishal Traders, Virpur, district Kheda had issued bogus / adjustment bills to a large number of concerns of Mehsana and Patan districts of Gujarat during FY 2006-07 onwards. That the proprietor of M/s. Vishal Traders - Shri Dharmendra J. Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the appellant by the Assessing Officer. The Assessing Officer added Rs. 4,74,98,513/- because according to him the assessee - Jagdamaba Ginning Factory- had shown purchases of Rs. 4,74,98,513/- from Vishal Traders during AY 2008-09 which were not genuine in light of the above facts. 3. Despite opportunities purchases from Vishal Traders not proved by the assessee: para 3.7 of the assessment order informs that the Assessing Officer through show cause letter dated 8.10.2010 asked the assessee to produce various details, registers, suppliers and transporters. In para 3.7 of the assessment order the Assessing Officer has elaborated this point and has stated that he asked the assessee to substantiate the claim of purchases by producing gatepass, L.R. receipts, challans, vouchers etc. He asked the assessee to establish quantitative co-relation between the purchases and sales in view of the manufacturing process flow chart, yield percentage, wastage ratio and power consumption. Despite opportunities, the assessee did not produce any evidence asked by the Assessing Officer. 4. Analysis of the Harij Bank account of Vishal Traders: In para 3.2 of the assessment order, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% was applied whereas in the 2nd and 3rd cases, addition was made to the extent of 12.5% of alleged bogus purchases. He also submitted that in the 4th case, entire addition was deleted and in case of Sun Steel (supra), addition of only Rs. 50,000/- was sustained out of total addition of Rs. 27.39 lacs. 2.5 As against this, Ld. D.R. supported the orders of authorities below. He also placed reliance on the judgement of Hon'ble Gujarat High Court rendered in the case of CIT Vs Hynoup Food and Oil Ind. P. Ltd. as reported in 290 ITR 702 in support of this contention that even in case of bogus purchases, the disallowance u/s 40A(3) is to be made. He submitted that as per this judgment also, the disallowance made by the A.O. and confirmed by Ld. CIT(A) is justified. He also placed reliance on the Tribunal decision rendered in the case of Swetambar Steel Ltd. Vs ITO in I.T.A. No. 707/Ahd/2002 dated 30.04.2003. He submitted a copy of this tribunal decision and in particular, our attention was drawn to para 13-15 of this tribunal order. 2.6 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgements ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was submitted by the assessee before him that only 25% of the purchases should be added in the present case. In view of this offer of the assessee before Ld. CIT(A) of making disallowance of 25%, we feel that in the facts of the present case, disallowance to the extent of 25% is justified and we hold accordingly. 2.8 Before parting, we would like to discuss and find out the applicability of various judgements cited by Ld. D.R. The first judgement cited by him is the judgement of Hon'ble Gujarat High Court rendered in the case of Hynoup Food and Oil Ind. P. Ltd. (supra). As per this judgment, it was held by Hon'ble Gujarat High Court that even in case of illegal business, disallowance u/s 40A(3) is justified in respect of cash payment above the prescribed limit. In our considered opinion, this judgement is not applicable in the present case because the facts are different. In that case, the entire business was out of books and admittedly, the payment for purchase was made by the assessee in cash whereas in the present case, purchases are duly accounted for by the assessee in the books in the name of Vishal Traders and payment to Vishal Traders was made by way of a/c payee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. We have already confirmed the disallowance to the extent of 25% and hence, these judgements do not support the case of the revenue for any further disallowance. Ground No. 1 of the assessee is partly allowed. 3. Ground No. 2 is as under: "2. The Ld. A.O. and Id. CIT (A) erred on facts in considering / sustaining the cash deposited of Rs. 3,65,73,8007- in bank account as cash credit / disallowable u/s 40A(3) of the act; where the appellant had adduced sufficient evidences in this regard and audited cash book, so the same is not tenable in the eye of law." 3.1 It was submitted by the Ld. A.R. that deposits in various bank accounts as noted by the A.O. on page 11 of the assessment order were in fact made out of cash withdrawn from Bank of India Account No. 13, and Harij Nagrik Sahkari Bank account No. 3646 and one more bank account with SBI. He also submitted date wise chart of cash withdrawal from these banks. He submitted that these bank withdrawals fully explains and source of cash deposit by the assessee in various bank accounts but the same was not examined because the assessee could not furnish the cash book before the authorities below. But now, the assessee is ready ..... X X X X Extracts X X X X X X X X Extracts X X X X
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