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TMI Blog2012 (9) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... In appeal, the learned CIT(A) deleted the addition made by the AO on the ground that (1) if the purchases figure from the above party is disbelieved then the profit rate comes to 84.84% which is abnormal (2) if the purchases are taken as bogus then the corresponding adjustment in closing stock and sales figures should also required to be done by the AO, (3) amounts shown in the name of M/s. Yogesh Textile Traders must have been used by the assessee to make the payments of unregistered dealers as observed by the AO and (4) there could not be sales without corresponding purchases. 5. On further appeal by the Revenue, the Tribunal vide order dated 21-08-2006 restored the matter back to the file of the CIT(A) for fresh adjudication after providing reasonable opportunity of being heard to the AO as well as the assessee. 5.1 After the matter was set aside by the Tribunal the AO filed letter dated 24- 11-2009 before the CIT(A) wherein he contended that : i. The Assessing Officer has not made any observation that the amount shown in the name of Yogesh Textile Traders was used by the appellant to make payment to unregistered dealers. It was only Assessing Officer's guess and not his find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation given by the assessee. He observed that the payments were made through the bank account of the assessee maintained in Central Bank of India and the statement filed by the assessee and the statement filed by the Bank did not tally. The Bank Manager on oath admitted his inability to throw light on the identity of the person collecting the cash from the Bank. Further, the AO on verification has found that the payments were either made through bearer cheques or through cash and total of such amounts came to Rs. 3,81,950/-. The AO has further noted that some of the cheques pertaining to assessment year 1999-2000 clearly indicate that the payments were collected by the assessee herself. Further, the account opened by Sri Dinesh Sarveshbhai Patel, proprietor of Yogesh Textile Traders who opened account with Shivam Sahakari Bank Ltd. closed the account on 06-10-2000 and it was also observed that the amounts credited to his account has been immediately withdrawn by cash. The husband of the assessee who had similar business was found to be one of the Directors of Shivam Sahakari Bank Ltd. It was also observed by the AO that although the sales were proved by sales tax order but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases made by the assessee should be accepted as genuine and no disallowance is called for. 12. The learned D.R. on the other hand submitted that the learned CIT(A) has passed an elaborate order after considering the remand report of the AO and the comments of the assessee which is self explanatory. Since the assessee failed to produce the party for the examination of the AO and since the purchases made from Yogesh Textile Traders remained unproved, therefore, the learned CIT(A) was justified in upholding the order of the AO making the addition of Rs. 6,82,460/-. 13. We have considered the rival submissions made by both the sides and perused the orders of the AO and the CIT(A). We have also considered the decision of the Coordinate Bench of the Tribunal in the case of Harsh Engineering. There is no dispute to the fact that the AO made addition of Rs. 6,82,460/- on the ground that the assessee could not prove the genuineness of the purchase of Goods from Yogesh Textile Traders amounting to Rs. 6,82,460/- and also failed to produce the party for his examination. It is also the allegation of the AO that amounts credited to the account of Yogesh Textile Traders have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es ought to have been made. Indeed it is a matter of common sense that there is no possibility of production if there is no raw material. Without input, there could not be any output. Additionally, the assessee has also proved that if the purchases are not taken into account, then the results are going to be unrealistic and the G.P. had to go high rate away from any reasonable percentage. Even if those concerns were bogus parties, but the basic question is that without purchases, there cannot be any manufacturing of sales. As far as the argument of the Ld. DR that the assessment was mad under Chapter XIV B is concerned, the answer given by Ld. AR was that the computation of undisclosed income even of the block period has to be made u/s. 158BB and as per Explanation annexed to this Section, the total income or loss of each previous year, for the purpose of determination of undisclosed income, be taken as the total income or loss computed in accordance with the provisions of this Act and the only rider is that the same should be without giving effect to set off of brought forward losses or unabsorbed depreciation. By this Explanation, the Legislature has made it clear that the undi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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