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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: D.T. GARASIA & SHRI MANOJ KUMAR AGGARWAL
Per D.T. GARASIA, Judicial Member:
The above titled appeals have been preferred by the Revenue against the common order dated 23.09.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2008-09 & 2009-10.
The short facts of the case are that a survey action under section 133A of the Act was carried out on 05.12.2012 at the office and godown premises of the assessee. Subsequently, the assessment was reopened by issue of notice u/s 148 of the Act. The Assessing Officer (hereinafter referred to as the AO) in the assessment order, considering the fact that the payment for goods
2 & ITA No.7044/M/2016 Shri Pravin D. Jain purchased from the following unknown parties has been made in cash, made the following additions of bogus purchases treating the same as unexplained expenditure u/s. 69C of the Act: 1. M/s. Hari Om Traders Rs.33,53,979/- 2. M/s. Mayur Enterprises Rs.69,76,382/- Total Rs.1,03,30,361/-
Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has partly allowed the appeal of the assessee.
Before us, none appeared on behalf of the assessee. We have heard the Ld. D.R. The Ld. D.R. relied upon the decision of the Tribunal, Ahmedabad Bench in the cases of Shwetambar Steels vs. ITO Ahmedabad and Ganesh Rice Mills vs. CIT (294 ITR 316). The facts in the present case show that assessee could not produce the parties from whom goods are stated to have been purchased. The suppliers were found to be engaged in providing bogus bill without actual dealing of goods. In this regard, the assessee has stated that they had submitted quantitative details of stock with respect of the sales with purchases from the parties during the assessment proceedings. The assessee has submitted the detail of corresponding sales in respect of the purchase from the said parties. As mentioned above the AO has never disputed or examined the aspect of sales receipts. Since the sales made by the assessee was not doubted or disputed by the AO and he has accepted the sales receipts of the assessee as it is, therefore, the AO cannot deny that purchases were not made by the assessee and the material was not used for its sales. What is under dispute is the purchases from the parties from whom bills have been taken and cheques have been issued to them. Purchases are not in dispute but the parties from whom purchase are shown to have been made are disputed and suspicious. The AO had made the addition as some of the suppliers were declared hawala dealers by the VAT Department. This may be a good reason
3 & ITA No.7044/M/2016 Shri Pravin D. Jain for making further investigation but the AO did not make any further investigation and merely completed the assessment on suspicion. Once the assessee has brought on record the details of payments by account payee cheque, it was incumbent on the AO to have verified the payment details from the bank of the assessee and also from the bank of the suppliers to verify whether there was any immediate cash withdrawal from their account. No such exercise has been done or findings recorded, There was no detailed investigation made by the AO himself. It is also found that the payments have been made by account payee cheque which are duly reflected in the bank statement of the assessee. There is no evidence to show that the assessee has received cash back from the suppliers. Merely because the suppliers did not appear before the AO or some confirmation letters were not furnished, one cannot conclude that the purchases were not made by the assessee. This view is supported by the decision of Nikunj Eximp Enterprises vs. CIT 216 Taxman 171 (Bom). To this extent, we are of the view that if the assessee has fulfilled its onus of making the payment by cheque and has supplied the addresses of the sellers then it cannot be presumed that supplier were bogus simply because the sellers were not found at the given address. There is a considerable time gap between the period of purchase transaction and period of scrutiny proceedings. The AO has not brought any material on record to show that there is suppression of sales. It is basic rule of accountancy as well as of taxation laws that profit from business cannot be ascertained without deducting cost of purchase from sales. Estimation of profit ranging from 12.5% to 15% has been upheld by the Hon'ble Gujarat High Court in the case of CIT vs Simit P Sheth 356 ITR 451 (Guj.). Respectfully following the decision of Hon’ble Gujarat High Court in the case of CIT vs. Simit P. Sheth 38 taxman 385 (Guj), we dismiss the departmental appeal.
In this appeal, during the year, the AO found that assessee had made purchases from following parties: 1. M/s. Tej Corporation 2. M/s. Mayur Enterprises 3. M/s. Hari Om Traders
We find that the Revenue has taken the identical grounds in and the same have already been decided as above. Following the same ratio applied in ITA No.7043/M/2016, we decide this appeal also.
In the result, both the appeals of Revenue are dismissed. 7.
Order pronounced in the open court on 31.08.2017.