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2015 (8) TMI 375 - PUNJAB & HARYANA HIGH COURT

2015 (8) TMI 375 - PUNJAB & HARYANA HIGH COURT - [2015] 377 ITR 189 (P&H) - Bogus purchases - ITAT deleted the addition concluding that the sugar purchased had been duly recorded in the books of accounts, which are duly audited; there is nothing on record to show that the purchases had been made outside the regular books of accounts - Held that:- Once the delivery of the sugar was taken over on as is where is basis at the godowns itself by taking the same on rent with the consent of the landlord .....

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. Once the said parties had confirmed the purchase which had been duly supported by the bills and they were regular traders and were unrelated to each other, therefore, the allegation made was held to be without any basis.

The said findings pertaining to the goods lying at the spot and whether the purchases had been made on credit basis and thereafter sold are all questions of facts which are now being raised, which have been extensively dealt with in detail by the Tribunal. The findi .....

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not entitle the Assessing Officer to add the value of the sugar to his undisclosed income which was done on the basis of conjectures. The said finding has been rightly reversed by the Tribunal after going into the factual matrix of the case which in the facts and circumstances cannot be held to be perverse and no substantial question of law arises for consideration in our opinion. - Decided against revenue. - Income Tax Appeal No. 183 of 2014 - Dated:- 5-8-2015 - S. J. Vazifdar, ACJ And G. S. S .....

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nothing on record to show that the purchases had been made outside the regular books of accounts; in the absence rejection of account books and of any adverse material, the addition of the income was held not to be justified. 2. The substantial questions of law are sought to be raised by the Revenue for consideration of this Court are as under:- "i) Whether on the facts and in the circumstances of ; the case the ITAT is right in law in not considering that credit purchases and sales stated .....

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case the ITAT is right in law in not considering the basic fact that the entire subject matter arose only after the seizure of sugar by Food & Civil Supplies Department and motive was to wriggle out of the situation. iv) Whether on the facts and in the circumstances of the case the ITAT is right in law in ignoring the fact that the assessee himself stated before Department of Food and Civil Supplies on 17.9.2009 that he is the owner of entire quantity of 97500 qtls. of sugar and further sta .....

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of judgment of Supreme Court in the case of Sumati Dayal, 214 ITR 801 that held that AO can look into surrounding circumstances. vi) Whether on the facts and in the circumstances of the case the ITAT is right in law in ignoring the fact that all the parties who purchased and sold sugar have done transactions without making actual payments and such kind of transactions i.e. as is where is basis were never done in their business and thus afterthought. vii) Whether on the facts and in the circumst .....

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books of account." 3. The respondent-assessee, proprietor of M/s Khubi Ram Johri Lal was doing the business of trading sugar, ghee and other items at old Grain Market, Moga. The assessee filed his return of income for the assessment year 2010-11 on 13.10.2010 declaring the taxable income of ₹ 1,36,79,960/-, which was processed under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). During the assessment year 2010-11, a raid was conducted on i .....

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he had purchased the sugar on 9.8.2009 from 45 unrelated parties and had sold the major portion thereof to 53 other parties before the date of the raid. However, the sugar had not been yet lifted and no payment had been made by any of the parties to the assessee. The details of the parties was given to the Assessing Officer. The statement of one Vishal Gupta, who was Manager with M/s Gitansh International Limited, who was owner of the godowns which had been let out, was also taken into considera .....

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pplies Department, had admitted that he owned the sugar which had been purchased from different sources but never stated that he had sold the same. It was only on afterthought in the form of sale invoices before the date of seizure which had been structured with an intention to escape the rigors of law with reference to hoarding of sugar. The godown owner having stated that the godowns had been let out on 1.8.2009 in vacant position and the claim that the sales had been cancelled leading to the .....

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ying in the godowns which had been taken on rent from M/s Gitansh International Limited. The parties were the traders duly registered with the Sales Tax Authorities whose TIN numbers are also mentioned in the bills issued. The VAT returns had been accepted by the authorities of the purchases declared by the appellant. The parties having sold the sugar to the appellant had also been confirmed by recording the statement of the said parties by the department itself apart from the fact that the docu .....

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ng the issue in hand. The question involved before the said authority was whether that much amount of sugar was permissible to be kept. 7. Once the delivery of the sugar was taken over on as is where is basis at the godowns itself by taking the same on rent with the consent of the landlord and it has been noticed that the Manager's statement was recorded twice and he got confused as to the factum whether the same was lying vacant or in possession for the purpose other than specified which wa .....

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