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CIT- VII Versus MIS Greysham & Co.

2015 (5) TMI 76 - DELHI HIGH COURT

Addition under Section 41(1) - CIT(A) restricted the addition also confirmed by ITAT - Held that:- What is apparent is that the AO based its conclusion on the basis of a narrow premise i.e. lack of response by the three parties i.e. M/s A.L. Metal & Methods Pvt. Ltd., M/s Laxmi Enterprises and M/s Komal Forging. The CIT (Appeals) noticed the inherent contradiction in the AOs action - on the one hand, accepting the higher GP Rate, which in turn was based upon the total turnover of the assessee, .....

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Adv. For the Respondent : None ORDER Mr. Justice S. Ravindra Bhat (Open Court) 1. The Revenue is aggrieved by the order of Income Tax Appellate Tribunal (hereinafter referred to as the "ITAT") dated 09.05.2014 whereby the Appellate Commissioner s order restricting the addition under Section 41(1) of the Income Tax Act, 1961 to ₹ 28,87,305/- for the Assessment Year (AY) 2003-04 was confirmed. 2. The assessee was engaged in manufacturing and sale of engineering goods comprising rai .....

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se parties did not respond and assessee by letters in response to enquiry submitted that two of the suppliers were duly registered with Excise and Sales Tax Department and appeared to be genuine parties. As far as confirmation of third vendor is concerned, assessee informed that the proprietor of the concern had died and, therefore, the business had closed. The AO observed that sum of ₹ 14,11,515/-, ₹ 14,34,586/- and ₹ 3,11,204/- being payable to the three concerns for purchase .....

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he A.O. in the Assessment Order and the facts of the case. On the basis of enquiries conducted by the A.O. he held that the appellant had failed to establish the identity of the three parties mentioned above. He therefore, held these parties to be nonexistent and disallowed the whole of the purchases made from the three parties. In this regard, it is seen that in second para on the first page of the assessment order the A.O. has observed that the G.P. rate during the year under consideration was .....

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