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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI B R BASKARAN & SHRI AMIT SHUKLA
आदेश ORDER �ी अिमत शु�ला, �या स: PER AMIT SHUKLA, JM:
The aforesaid appeals have been filed by the assessee against separate impugned order dated 08.11.2013, passed by Ld. CIT(Appeals)-25, Mumbai for the quantum of assessment passed under section 143(3) for the assessment year 2004-05, 2005-06 and 2006-07. Since common issues
2 ITA No. : 653/Mum/2014 ITA No. : 654/Mum/2014 ITA No. : 655/Mum/2014 केतन एंटर�ायसेस Ketan Enterprises are involved arising out of identical set of facts, therefore, the same were heard together and are being disposed off by way of this consolidated order.
In all the appeals the assessee is mainly aggrieved by the confirmation of addition of purchase by applying gross profit rate of 10%. In AY 2004-05, the additions sustained by the CIT(A) on this score is Rs.10,000/-; in AY 2005-06 it is Rs.50,250/-; and in AY 2006-07 the disallowance stands at Rs.50,234/-.
The brief facts of the case are that, the assessee is partnership firm engaged in the business of manufacturing and trading in textile cloth. A survey action under section 133A was conducted in the following cases:- 1. Shri Rakeshkumar M Gupta, Prop of M/s Manoj Mills; 2. Smt. Hema R. Gupta, Prop. of M/s Shree Ram Sales & Synthetics; 3. Shri Mohit R Gupta, Prop. of M/s Astha Silk Industries.
During the survey, it was found that these group concerns were engaged in activities of issuing/providing accommodation bills and no actual trading activities have been conducted by these parties and also no stock was found. The relevant information regarding survey has been incorporated by the AO from pages 1 and 2 of the assessment order. Based on these informations, the assessee’s case was reopened under section 147 for all the above impugned assessment years. In the reasons recorded, the AO has pointed out that assessee had made purchases from these entities in different years and hence assessee was also party
3 ITA No. : 653/Mum/2014 ITA No. : 654/Mum/2014 ITA No. : 655/Mum/2014 केतन एंटर�ायसेस Ketan Enterprises to such accommodation entities. Before the AO, the assessee in support of purchases made, vide its letter dated 15.12.2010 furnished all the details, viz., copies of purchase invoice, delivery challan, transportation receipts issued by these entities etc; Besides this, the copies of sale invoice in respect of goods sold out of the goods received from these persons were also submitted to prove the linkage and grievances of the entire transactions. The AO, however, after taking note of various information received during the course of survey and also various statements recorded at that time, held that, accommodation bill of Rs.1 lakh is to added back as unexplained income of the assessee for the assessment year 2004-05; Rs.5,02,501/- for the assessment year 2005-06; and Rs.5,02,342 for the assessment year 2006-07.
The Ld. CIT(A) after considering the entire gamut of information as reproduced by the AO and also the material placed and submissions made by the assessee held that, the entire purchase cannot be added and held that, 10% of such purchases in the form of gross profit should be added. The relevant observation and finding of the CIT(A) reads as under:- “6. I have perused the assessment order, written submissions of the appellant and the facts and circumstances of the case. On plain reading of the assessment order, I find that the AO has basically relied on the statements recorded of Shri Rakeshkumar M Gupta & others during the course of survey action u/s 133A and subsequently re-affirmed on oath u/s 131 of the Act, to make additions in hands of purchaser party
4 ITA No. : 653/Mum/2014 ITA No. : 654/Mum/2014 ITA No. : 655/Mum/2014 केतन एंटर�ायसेस Ketan Enterprises i.e. the appellant in this case. I further observe that the appellant has submitted during assessment proceedings, the copy of invoice sent to processor out of material received from Gupta party and copies of sales invoice in respect of goods sold out of goods received form processor, as stated in para 11 of the assessment order. Considering the same, it has to be accepted that there can be no sales without corresponding purchases, and when the sale of appellant is not disputed, the additions of entire alleged purchases is also not justified.
6.1 Looking at the facts and circumstances of the case as a whole, I am of the considered view that the cause of justice would be met by making addition at 10% of such purchases in order to fill the gap difference of GP for the alleged purchases as well as plug any leakage of revenue. The AO has made additions of alleged purchases from Gupta parties at Rs.1,00,000/-. Hence, the additions is restricted to 10% of said purchases i.e. to Rs.10,000/- and hence the appellant gets relief of balance Rs.90,000/-“.
Before us the Ld. Counsel for the assessee submitted that the Tribunal in case of Shri Jaysh C Vasa in vide order dated 18.12.2015, has allowed the assessee’s appeal exactly on similar facts and circumstances. On the other hand, Ld. DR relied upon the order of CIT(A).
5 ITA No. : 653/Mum/2014 ITA No. : 654/Mum/2014 ITA No. : 655/Mum/2014 केतन एंटर�ायसेस Ketan Enterprises 7. After considering the relevant finding given in the impugned order as well as material placed before us, we find that the entire addition made by the AO is on the basis of information received during the survey operations in the case of three persons / entities as stated above, which were found to be providing accommodation bills. Before the AO as well as CIT(A), the assessee has not only filed copies of the purchase bills but also has furnished delivery challan, transportation receipts to show that the goods as shown in the invoice has actually been the delivered and also produce the copy of sale invoice in respect of the goods sold out of the goods purchase from these entities. Once these facts have been accepted and had not been controverted or rebutted, then simply relying upon the information in the survey would not be sufficient. The Ld. CIT(A) has given categorical finding to this effect which has been noted by us in the foregoing paragraph. Once, the purchase amount is flowing from the sources shown/given in the books of account and it has also been admitted that sale have also been effected from such purchases which are reflected in the books of accounts, then we do not find any reason to make further addition of gross profit of 10%, because already a gross profit on such purchase and sale has been shown by the assessee which has been subjected to tax. Once the purchases debited are reflected in the regular books of accounts and have been made from the sources of disclosed and thereafter sale has been made which has been shown on the credit side of the trading account, then the balancing figure of gross profit alone is the consideration of taxability which here in this case has already been factored into. Thus, any addition, over and