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2015 (11) TMI 1311 - DELHI HIGH COURT

2015 (11) TMI 1311 - DELHI HIGH COURT - TMI - Addition on consignment purchases made by the assessee - CIT(A) deleted the addition confirmed by ITAT - Held that:- CIT (A) held that the single instance did not call for complete rejection of the Assessee’s books of accounts. The CIT(A) gave a further opportunity to the Assessee to explain the discrepancy since the P&L Account was debited to an extent of ₹ 11,43,016/- towards ‘own purchase’, whereas the sale of milk had been shown as consignm .....

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disclosed closing stock, the CIT(A) noted that an incorrect figure had been given by the Assessee by mixing the figures of monthly sales with monthly purchases in some months or by mixing up opening or closing stock at the end of the month with the relevant monthly purchases. The actual closing stock out of the consignment purchases amounted to ₹ 31,755/- which had been duly disclosed in the balance sheet. The An explanation offered by letter dated 15th February, 2006 had been accepted by .....

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ld that:- CIT(A) was satisfied that one Khurshid S/o Fazal, who had been summoned was a wrong person and he had denied having a dealing with the Assessee. This was supported by a letter dated 9th March, 2006 of the Chartered Accountant. It was also urged before the CIT (A) that no serious attempt was made to summon vendors who lived in remote areas of UP and Haryana. The CIT (A) then asked the AO to conduct another inquiry and send a report. This report showed that the transactions were conducte .....

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tted by the ITAT - Decided against revenue - ITA No. 183/2013 - Dated:- 16-11-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr. Kamal Sawhney, Senior Standing Counsel with Mr. Raghvendra Singh, Junior Standing Counsel and Mr. Shikhar Garg, Adv For the Respondent : Mr. M.P. Rastogi and Mr. K.N. Ahuja, Adv ORDER 1. This appeal under Section 260A of the Income Tax Act, 1961 (the Act) by the Revenue is directed against the order dated 18th May, 2012 passed by the Income Tax Appella .....

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account of the finding that the identity, credit worthiness and genuineness of the transactions with the assessee's creditors had not been duly established?" 2. The Assessee is engaged in the business of supply of milk and milk products. The Assessee also trades in the said products on consignment basis, acting as a commission agent for supply of such items directly by the vendors to reputed hospitals, hotels, restaurant, etc. The manufacturing unit/works of the Appellant is located in .....

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ssee were found. The Assessee filed his return of income for the AY in question on 31st October, 2003. The return was picked up for scrutiny and a questionnaire was sent to the Assessee on 29th November, 2004. 4. Apropos the two issues that have been urged by the Revenue for consideration in this appeal, a perusal of the assessment order dated 30th March, 2006 passed by the Assessing Officer (AO) reveals that pursuant to the questionnaire, by a letter dated 15th February, 2006, the Assessee info .....

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t ₹ 3,49,90,459/-. Notices were issued to thirteen (13) consignment vendors under Section 133(6) of the Act. Of the 13 notices issued, 6 were returned unserved by the postal authorities. The Assessee produced four of the consignment vendors whose statements were recorded by the AO under Section 131 of the Act. The AO concluded that the alleged consignment purchases and sales were actually the own trading of goods of the Assessee which had been introduced in the books of accounts. According .....

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f ₹ 11,84,861/- was added to the taxable income. 5. Another issue considered by the AO was the amount owed to creditors shown as ₹ 1,02,72,113/-. The AO concluded that the Assessee could not demonstrate the identity, genuineness and creditworthiness of the said creditors and directed the addition of ₹ 1,02,72,113/- to the income of the assessee on account of bogus creditors shown in the books under the garb of consignment vendors. Besides the aforementioned creditors, the AO al .....

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e the CIT (A), the Assessee furnished further documents such as sales tax assessment order, confirmed copies of accounts from vendors etc. A remand report was submitted thereon by the AO on 11th December, 2006. It was noted by the CIT (A) that the AO did not rebut the additional evidence tendered by the Assessee. The CIT(A) observed that it was clear from the report of the AO that the consignment vendors whose statements were recorded admitted to having supplied milk and milk products to differe .....

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nt was debited to an extent of ₹ 11,43,016/- towards own purchase , whereas the sale of milk had been shown as consignment sale to Apollo Hospital. The Assessee then filed a chart giving the break-up of the sale of milk to Apollo Hospital which showed that the purchase of the milk sold to it was already debited to the P&L Account. However, the sales of milk worth ₹ 21,65,485/- made to Apollo Hospital was not included in the P&L Account. After accounting for the commission inc .....

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7; 31,755/- which had been duly disclosed in the balance sheet. The An explanation offered by letter dated 15th February, 2006 had been accepted by the AO. The figures had been corrected on 22nd March, 2006 during the course of assessment proceedings. On this a remand report was requisitioned. After considering the report of the AO the CIT (A) was satisfied that the discrepancy in the figures had been satisfactorily explained by the Assessee and accordingly deleted the said addition. 8. As regar .....

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