9911796707
TMI Blog2014 (4) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... i) M/s. Rajputana Vanijya Pvt. Ltd. - Rs.97,80,744/-; (ii) M/s. Classic Sales Agency - Rs.37,54,020/-; (iii) M/s. Shree Mangalam Enterprises - Rs.35,51,100/- 4. First of three persons being a Corporate Entity, Assessing Officer verified the records available with the Income Tax Department. From the balance sheet filed by the said Company, Assessing Officer found that there was no such amount due from the assessee. As per the assessee, the credit balance in the account of M/s. Rajputana Vanijya Pvt. Ltd. (in short 'RVPL') arose on account of purchases made between 27.11.2007 and 12.01.2008 for a sum of Rs.1,08,69,800/-. Assessing Officer found from the PAN of that Company, that it was incorporated only on 24.01.2008. Further according to the Assessing Officer, said M/s. RVPL had a turnover of Rs.15,77,000/- only for 14 months period ending on 31.03.2009. It's Director Shri Sumit Sharma was summoned and statement on oath taken from him under section 131 (1) of the Act. I t was stated by the said Director that they were wholesale dealers of hardware goods, iron and steel. He also confirmed that the ledger filed by the assessee under the signature of one Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sively meant for assessee's not engaged profession or business. The said return did not show any amount as due from assessee. 7. Assessing Officer did give an opportunity to the assessee for producing the above creditors and for their examination, if she wanted to do so. Assessee never used such opportunity. Therefore, he came to a conclusion that purchases were not correctly and fairly reflected in the accounts of assessee. Nevertheless as per the Assessing Officer since sales were shown by assessee, there would have been purchases made as well. In this view of the matter, Assessing Officer considered the said creditors of Rs.1,71,24,938/- as bogus and made an addition accordingly. 8. Assessing Officer also found that the assessee had taken loans from fair persons, namely Smt. Simple More, Smt. Dimple More, Shri Murari More and Smt. Bina More of Rs.1,00,000/-, Rs.1,20,000/-, Rs. 41,00,000/- and Rs.1,40,000/- respectively. Though PANs of the concerned persons were furnished by the assessee, Assessing Officer refused to accept these credits. According to him, these persons had income, which were much less than the taxable limit and their creditworthiness could not be established. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, as per ld. CIT(Appeals) , purchases might have been made by the assessee from other parties but in the books, names of these creditors might have been mentioned. Nevertheless according to him purchases indeed were made by the assessee. Ld. CIT(Appeals) also compared the audited accounts of the proprietary concern of assessee for assessment years 2006-07 to 2 009-1 0 . According to him the only course available when trade creditors were not found correct, was to reject the books of accounts. In such a situation, best course, as per ld. CIT(Appeals) would be to resort to estimation of income. Assessee was engaged in business of pulses, rice and sugar. Another assessee named M/s. Kamal Stores, engaged in a similar line of business had shown a net profit at the rate of 0 .68%, against 0.1 1 % shown by assessee. He, therefore, directed the Assessing Officer to adopt net profit @ 0.70% on the turnover of assessee. In other words, ld. CIT(Appeals) fixed the profits of the assessee at Rs.6,45,856/- while deleting the addition of Rs.1,70,85,846/- on account of bogus credit. 11 . Vis-a-vis the addition for alleged bogus loans, it was submitted by the assessee before ld. CIT(Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esumed that for the sales mentioned there would have been equal purchase also. As per the ld. D.R., ld. CIT(Appeals) went wrong in directing the Assessing Officer to adopt a gross profit percentage, resorting thereby to an estimation, while deleting the addition made for bogus creditors. Reliance was placed on the decision of Hon'ble Delhi High Court in the case of CIT -vs.- Laa Medica (250 ITR 574). 13. In so far as loan credits of Rs.4,60,000/- was concerned, ld. D.R. submitted that none of the parties had the resources to support the loans. According to him, just because payments were effected by account payee cheques would not mean that the transactions were genuine. 14. Per contra, ld. A.R. strongly supporting the order of ld. CIT(Appeals) submitted that Assessing Officer by himself accepted the purchases and sales. According to him, Assessing Officer at page 4 of the assessment order accepted that when sales were there, purchases also would have been there. Again at page 5 of the assessment order, Assessing Officer had accepted that for every sale there would be a purchase. Assessing Officer also mentioned that there was no reliable information that assessee had effected pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(Appeal) had reached a conclusion that Assessing Officer had accepted assessee's sales as well as purchases. The relevant observation of the Assessing Officer in the assessment order is reproduced hereunder:- "I understand that the details of purchases are not correctly and fairly reflected. The amount attributed to the sundry creditors is manifestly bogus. It is also to accept that when sales are made, there must have been purchases and expenses incurred. To ensure there is transparency in transaction and monitoring of trail of money, the legislature has enacted section 40A(3) for payment of money exceeding Rs.20,000/- otherwise the expenses would be disallowed. Even if I refrain from saying that money for purchases were out of her undisclosed source as the incidents of purchases running into crores were fake so far as identity of the suppliers are concerned, it is not established from the side of the assessee that money were actually paid in instalments of less than Rs.20,000/-every day so as to avoid the rigours of section 40A(3). In every assessment proceedings, unlike a penal proceeding, the assessee has to discharge his/her onus adequately and then only the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, M/s. RVPL was not only not existing during the period when assessee claimed to have made purchases for it, but it had also denied any transaction with the assessee at all. It's Directors even stated that they were willing to pay 50% of the money to the Tax Department, if the assessee was willing to pay the amount of Rs.97,80 ,744/- shown as payable to them. 17. The second creditor namely M/s. CSA was represented by its proprietor Shri Sunil Das. He was a radio mechanic, who had never done any business with the assesese. He denied any transaction with the assessee. Both Shri Sunil Das, proprietor of M/s. CSA and Shri Sanjiv Kr. Singh and Shri Sumit Sharma, Directors of M/s. RVPL denied the signatures in the ledger copies produced by assessee. As for the third trade creditor namely M/s. Shree Mangalam Enterprises represented by Shri Ajay Jalan, the said person was not doing any business and his income tax return did not show any business income. 18. Assessee was given an opportunity for producing the creditors and examining them. Assessee did not avail such opportunity. In the face of the above facts, we cannot find any fault in the order of Assessing Officer for coming to a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no evidence to show that any of the three persons had sold anything on credit to the assessee. Further none of them had any dealings with the assessee and two of them specifically denied any transaction, and even the signatures. Assessee was dealing in food grains, fresh vegetables and fruits, whereas M/s. RVPL, the first creditor dealt in hardware items. Second party namely M/s. CSA was a radio mechanic and the third party namely M/s. SME was not even holding a trade licence. None of these parties were in the line of manufacturing or supplying the type of items dealt by the assessee. H ence, in our opinion, decision of the Hon'ble Allahabad High Court relied on by the ld. A.R. would not have any applicability on facts. Hon'ble Apex Court in the case of CIT -vs.- Sun Engineering Works [198 ITR 297], has clearly held that observations of a court are to be understood only in the light of question before it. A decision of a court takes its colour from the question involved in the case and it is not proper to pick out a word or sentence divorced from the question raised and treat it as complete law. 20. Coming to the decision of the Hon'ble Jharkhand High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
