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2015 (12) TMI 378 - ITAT MUMBAI

2015 (12) TMI 378 - ITAT MUMBAI - TMI - Addition u/s 69 - purchases were made from undisclosed/unverifiable/unidentifiable parties in the grey market by investing in cash and the purchases from the group concerns of Shri Rakeshkumar Gupta & family were only accommodation entries and not actual purchases - Held that:- The assessee before the AO vide letter dated 26th August, 2010 have submitted the entire quantitative details of opening stock, purchases, sales made during the year and closing sto .....

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s.If the opening stock, closing stock, sales, gross profit have not been disturbed and quantitative details of purchases are fully verifiable, then no addition on account of purchases can be made. Thus, the finding of the CIT(A) to this extent is upheld.

However, the Ld. CIT(A) has went step further and made an addition of 10% on account of gross profit on such alleged purchases on the ground that such an addition will cover whatever little discrepancy is there in the trading account. .....

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on by the assessee against the impugned order dated 19.11.2013 passed by CIT(A)-25, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2003-04. In the grounds of appeal, the revenue has raised following grounds: 1. The Ld. CIT(A) has erred in law as well as on fact by not sustaining addition u/s 69 after having accepted the finding in principle that the purchases were made from undisclosed/unverifiable/unidentifiable parties in the grey market by investing in cash and .....

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en market out of unaccounted cash, in view of the decision held by the Hon ble ITAT s C Bench, in the case of Vijay Proteins Ltd vs ACIT (58 ITD 428). 3. For the above mentioned reason and any other reasons that may be urged at the time of hearing, it is required that the order of the CIT(A) be quashed and that of the AO be restored . 2. Brief facts of the case are that, the assessee is engaged in the business of trading in unbranded cloth. Return of income for the AY 2003-04 was filed on 30.10. .....

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corded u/s 148 and case was reopened u/s 147 vide notice dated 22.03.2010 issued u/s 148. The relevant content of reasons recorded have been incorporated by the AO in para 3. Since validity of reopening u/s 147 has not been challenged, therefore, the facts and issues relating to reopening is not being discussed. In response to the show cause notice by the AO on merits, the assessee submitted and stated as under :- (i) The goods purchased from these parties were hand delivered by them as per the .....

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pening is bad, illegal, void and against the provisions of law . However, the Ld. AO rejected the assessee s contention and observed that assessee has not maintained day-to-day stock register and even the Auditors have pointed out that the quantitative details have not been maintained. The assessee also could not produce any evidence to show that the alleged called purchases from the such parties have been sold on no profit and no loss basis . Accordingly, he added the entire purchases of ₹ .....

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s of relevant bank statements, details of bill-wise purchases made from the parties and copy of ledger account to prove the genuineness of the book results. The purchase from all the parties were duly recorded in the books of account and also the sales made, therefore, either the purchases or the gross profit cannot be doubted. The Ld. CIT(A) noted down the following month-wise quantitative details of opening stock, purchases, sales and closing stock :- (In Meters) Opening stock as on 01.04.2012 .....

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ence on gross profit for the said purchases to plug any leakage of revenue and accordingly, the addition of ₹ 1,15,668/- was made in the following manner :- 6.1 Looking at the facts and circumstances of the case as a whole, I am of the considered view that the case of justice would be met by making addition at 10% of such purchases in order to fill the gap difference of GP for the said purchase as well to plug any leakage of revenue. The appellant has submitted that the total purchases fro .....

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lant gets relief of balance ₹ 14,63,952 - 1,15,668 - ₹ 13,48,284/- accordingly . 4. The Ld. DR strongly relying upon the order of the AO, submitted that in the audit report itself, it was mentioned that day-to-day stock record have not been maintained and quantitative details cannot be verified. Therefore, addition of purchases has rightly been made specifically when it has been found that assessee was involved in getting the accommodation bills from the concerns of Shri Rakeshkumar .....

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r, as regards the information gathered during the course of survey in the case of Rakeshkumar Gupta, Ld. Counsel submitted that the entire information was based on statement of Shri Rakeshkumar Gupta which itself has been retracted by him, therefore, it has no evidentiary value, when entire evidence for the purchases have been given by the assessee. Thus no addition whatsoever could have been made on account of purchases or on account of any GP rate. 6. After considering the rival submissions an .....

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