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TMI Blog2015 (9) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... f alleged inflated expenses. 1.1. The CIT(Appeals) failed to appreciate the submissions and evidences produced by the assessee. 1.2. Without prejudice to the above mentioned ground, the CIT(Appeals) ought not to have made any addition and if at all some addition was to be sustained it ought to have been of a reasonable percentage/amount. 2. The CIT(Appeals) erred in upholding the disallowance under section 40A(3) of an amount of Rs. 1,37,780/-. 2.1. The CIT(Appeals) failed to appreciate that the payment did not infringed section 40A(3) r.w.s.6DD of the Income Tax Rules, and hence, the disallowance upheld is bad in law. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght under the facts and circumstances of the case. He further submitted that the Hon'ble High Court of Gujarat in the case of Mayank Diamonds Pvt.Ltd. vs. ITO in Tax Appeal No.200 of 2003, dated 07/11/2014 has held that the GP rate at 5% be applied and income of the assessee be estimated accordingly. 3.1. On the contrary, ld.Sr. DR vehemently argued that there is no dispute with regard to the fact that on enquiry it was found that the claim of purchases made from the parties was found to be incorrect. He further submitted that the judgement of the Hon'ble Jurisdictional High Court in the case of Mayank Diamonds Pvt.Ltd. vs. ITO as relied upon by the ld.counsel for the assessee relates to Diamond Industries where profit margins are very low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not suppress any profit margins. In our considered view, it is incumbent upon the assessee to prove the genuineness of its claim in respect of the purchases made, but the assessee in the given case has grossly failed to do so. The AO pointed out that on the bills furnished by the assessee, there was no mention of VAP/ST Numbers. All the bills were computer-generated did not have detailed addresses of the parties and no contact numbers are mentioned in any of the Bill. The ld.counsel for the assessee has placed reliance on the judgment of the Hon'ble Jurisdictional High Court in the case of Mayank Diamonds Pvt.Ltd. vs. ITO (supra). However, the facts before the Hon'ble High Court related to the Diamond Industry. Since the profit margin v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution of India. He submitted that although it is not made in a legal tender. He placed reliance on the Board's Circular No.34 (F No.13A/92/69-IT(A-II), dated 5.3.1970. We find that the Hon'ble High Court of Delhi in the case of Basu Distributor (P.) Ltd. vs. Asst. CIT[supra] has held as under:- "8. In the present case, the appellant assessee had filed before the Tribunal a copy of their bank account statements as well as ledger account of the parties to whom the payment was required to be made. It is apparent that the appellant-assessee was not doing well in its business and was lacing liquidity and financial crunch. An examination of the bank account statement shows that whenever cash deposit was made in the bank account, it was imme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said aspect an order of remit was passed by the tribunal and no addition or adverse observation was made by the Assessing Officer. These were relevant and material aspects which were required to be considered and examined by the tribunal but have been overlooked. Keeping in view the quantum of the total amount, we were initially inclined to remit the matter. However, looking at the averments made, the assessment years in question and explanation given, we refrain from issuing the said direction and accept the contention of the appellant. 9. In view of the aforementioned, the answer to the above question is in negative and in favour of the appellant and against the Revenue. The appeal is allowed. No costs." 6.1. We find in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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