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2015 (12) TMI 1366 - ITAT MUMBAI

2015 (12) TMI 1366 - ITAT MUMBAI - TMI - Disallowance of purchases made - bogus purchases - CIT(A) restricted the disallowance to 7% as against 25% made by AO - Held that:- The assessee being in an export promotion zone, the movement of its goods is controlled and customs approved; that the purchases being approved purchases, there was no question of their being bogus purchases. The assessee enclosed the custom approved invoices in respect of purchases from Zalak Impex. These invoices have been .....

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g Authorities, however, took these invoices into consideration and wrongly held the assessee’s purchases from Zalak Impex to be bogus purchases. Nothing has been brought on record to show that these invoices were self made or fabricated. Moreover, the comparative chart of purchases made during the year and the selling price (page 141-144), as filed before the ld. CIT(A) has not been refuted and this also goes to prove the theory of bogus bills and accommodation entries to be wrong. Therefore, th .....

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ssee : Shri Prakash K. Jotwani ORDER PER A.D. JAIN, J.M. : ITA No. 7593/Mum/2011, for A.Y. 2006-07 has been filed by the Department whereas ITA No. 8292/Mum/2011, for A.Y. 2006-07 stands filed by the assessee, against the action of the ld. CIT(A) in restricting the disallowance of 25% of purchases made by the A.O. to 7%. The Department s contention is that the disallowance had to be confirmed in toto, whereas according to the assessee, the disallowance requires to be deleted in full. 2. As per t .....

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appeal in time, the delay is condoned. 3. ITA No. 6435/Mum/2013, for A.Y. 2006-07 is Department s appeal against the ld. CIT(A) s action of deletion of concealment penalty of ₹ 11,94,545/- imposed on the assessee in the aforesaid matter. 4. As per the record, the completed assessment of the assessee for the year under consideration, i.e. A.Y. 2006-07 was reopened on the basis that information was received from the ITO -25(20(1), Mumbai, that during the survey proceedings conducted at the .....

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to 7%, amounting to ₹ 35 lacs. 5. Before the ld. CIT(A), the assessee raised the following ground of appeal, amongst others:- 2(e) The Learned Assessing Officer failed to appreciate that appellant has not given the opportunity to cross-examine Shri Hiten Rawal, proprietor of M/s Zalak Impex. The addition therefore cannot be sustained. 6. The ld. CIT(A), however, did not adjudicate the said ground. Placing reliance on the Tribunal order dated 8-8-2014, passed in ITA No. 6735/Mum/2010 for A .....

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d that the statement of Shri Hiten L. Rawal, proprietor of Zalac Impex was never provided to the assessee and no opportunity of cross examination of Shri Rawal was afforded to the assessee, thereby leading to the illegal addition, which was wrongly sustained in part by the ld. CIT(A), though it ought to have been deleted in full. 7. The ld. D.R., on the other hand, relying on the impugned order, has contended that as per the assessment order, the A.O. had asked the assessee to produce Shri Hiten .....

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es in the form of sales and purchases, to various parties. The assessee was stated to have obtained bills for nonexisting parties, amounting to ₹ 4,09,12,718/-, during the year under consideration. The assessment order dated 21-12-2010 was passed pursuant to the said reopening. 9. It remains undisputed that the assessee was never provided any opportunity to cross examine Shri Hiten L. Rawal, though he specifically asked for such cross examination. On the other hand, the burden was sought t .....

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tement to the party. Hence, on this score alone, the reassessment order is unsustainable in the eye of law and we hereby cancel the same. As a consequence, the order of the ld. CIT(A) is also cancelled in toto. 10. Further, even otherwise, before the A.O., the assessee had contended, by written submissions filed on 25-11-2010, inter alia, that during the year, they had purchased diamonds worth ₹ 4,09,12,718/- from M/s Zalak Impex; that the assessee being in an export promotion zone, the mo .....

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and received by the assessee. As such, these purchases could not have, by any stretch of imagination, been treated as bogus purchases. It is also noteworthy that the payments made by the assessee to Zalak Impex were through account payee cheques only. Neither of the Taxing Authorities, however, took these invoices into consideration and wrongly held the assessee s purchases from Zalak Impex to be bogus purchases. Nothing has been brought on record to show that these invoices were self made or f .....

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