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2023 (10) TMI 400 - AT - Income TaxBogus sale purchase transactions - Addition u/s 40A(3) - AO rejecting the book results and thereby enhancing the turnover and adopting the GP rate @ 15% - Learned counsel submitted that not only sec. 40A(3) disallowances herein does deserves to be deleted but also these twin assessee’s are entitled for reduction in G.P. which has been assessed at a very exorbitant rate of 2% in the CIT(A)'s respective orders under challenge - HELD THAT:- As lower authorities had found these twin assessee’s as well as various other entities to have sourced their purchases from, and to, as the case may be, M/s. Blue Bird India Ltd., which in turn, was found to be engaged in providing accommodation entries. We further wish to reiterate that this so-called accommodation entry provider entity’s book results as well as turnover have been found to be genuine in this tribunal’s learned coordinate bench’s order. The necessary corollary that flows therefrom is that once M/s. Blue Bird India Ltd., has been held to be a genuine entity which was seriously doubted so as to give rise to all these sec. 148/147 proceedings, we must necessarily hold that all the corresponding sale/purchase book results of these assessees must also deserve to be accepted in toto since not based on any other independent finding. That being the case, we must also hold that the learned lower authorities action, more particularly, that of the AO rejecting books as well as disallowing sec. 40A(3) cash purchases deserve to be upheld qua the latter issue only as these twin assessee’s had themselves recorded the same in their returns submitted but also there is no justification of their part in justifying the respective cash purchases as per Rule 6DD. The very factual position continues before us as well as these twin assessee’s identical endeavor is only to reduce the gross profit estimation than explaining the mitigating circumstances/business exigencies in making cash purchases. Faced with the situation, we conclude that these twin assessee’s respective book results ought to be treated as genuine, which inturn, forms sufficient material for us to revive the Ld. Assessing Officer(s) identical action to the extent he had made sec. 40A(3) disallowance, involving varying sums, in all these cases. The Revenue’s stand is partly accepted to this limited extent in all of it’s instant three appeals
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