TMI Blog2013 (11) TMI 1605X X X X Extracts X X X X X X X X Extracts X X X X ..... for A.Y. 2006-07, dated 19-4-2012 for A.Y. 2007-08 and dated 20-4-2012 for A.Y. 2008-09 passed by the ld. CIT(A) - 25, Mumbai and the seventh appeal is the appeal of the assessee which is directed against the order of ld. CIT(A) -25, Mumbai dated 20-04-2012 for A.Y. 2005-06. Since common issues are involved therein, the same have been heard together and are being disposed of by this single consolidated order for the sake of convenience. 2. The common issue involved in these appeals relating to the additions made by the A.O. on account of unexplained/unproved purchases and sustained partly by the ld. CIT(A) is raised in the following grounds:- A.Y. Addition made by the A.O.(Rs) Addition sustained by the ld. CIT(A)(Rs) Assessee s ground No. Revenue s ground No. 2005-06 2,73,700/- 28,000/- 1 - 2006-07 26,45,012/- 2,65,000/- 1 1 2007-08 34,24,522/- 3,43,000/- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that the purchases were genuine and there was no inflation of purchases. Accordingly, he completed the assessment for A.Y. 2007-08 u/s. 143(3) making addition of ₹ 34,24,522/- u/s. 69 of the Act holding it to be the unexplained investment in the goods purchased. 4. The additions made by the A.O. on account of unexplained purchases/investments were challenged by the assessee in the appeals filed before the ld. CIT(A). Elaborate submissions were made on behalf of the assessee in support of its case on this issue which as summarized by the ld. CIT(A) in his impugned order for A.Y. 2007-08 , were as under:- 1) The assessee had made genuine purchases and payment were made by A/c payee cheques which were confirmed. 2) Bank confirmations were filed stating that payment were credited in seller s account. 3) Quantitative tally of purchases, sales and stocks given to AO and also appellate proceeding. 4) Purchases and corresponding sales have been established before AO and also produced before CIT(A) for verificationsupported by delivery challan. 5) Impugned sellers have confirmed the sales to the assessee in affidavits as well as written communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese persons actually made the sales to the assessee and consequently purchases made by the assessee were genuine. The assessee had shown that the items shown to be purchased from these 3 concerns which were disputed by the AO, have been duly recorded in books of accounts and sold by the assessee to other persons/retailers or are part of closing stock, and this facts has been brought on record by the assessee even during the course of assessment proceedings and remand proceeding and this fact remains uncontroverted even now as of date. It is undisputed that no survey action or any further inquiry was carried out in the case of the assessee. It is seen that neither any meaningful inquiry or investigation was carried out either in the case of the assessee or Gupta s after survey action or during assessment proceeding as well as remand proceeding. The sole reliance was placed on initial general statements of Shri Rakeshkumar Gupta. No counter inquiry or investigation was carried out after retraction. Since the assessee furnished quantitative tally of purchases, sales and stock, the AO had observed on page 8 of assessment order itself that the assessee might have purchased goods from so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in fact purchased from one Mr. Rakeshkumar Gupta, proprietor of Manoj Silk Mills, Mrs. Hema Gupta, proprietress of Shree Ram Sales Synthetics and Mr. Mohit Gupta, proprietor of Astha Silk Industries or from some other parties or from the open market and then effected the sales. Otherwise, the corresponding sales/closing stock has to be reduced which will give absurd results of negative income. The issue has another facet also. The AO had made the addition u/s. 69 of the Act for these disputed purchases. For the sake of clarity, section 69 of the I.T. Act is reproduced below: Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of investments or the explanation offered by him is not, in the opinion of the AO, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year From the above, it can be seen that addition u/s. 69 cannot be made in the case of the assessee as the purchases effected by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings). During the course of assessment proceedings the assessee had furnished quantitative tally of stock, purchases and sales. The assessee also produced delivery challans. Even during the course of appellate proceeding trail of purchase and corresponding sales was demonstrated randomly. The payments have been made by account payee cheques and bank also certified thereto. There is no evidence on record that the payments made by the assessee have come back to him in cash. The assessee is able to correlate purchases with corresponding sales/closing stock. The AO has merely relied upon the general statement of Shri Rakeshkumar Gupta and others which was subsequently retracted in part by way of written communication and affidavits. Therefore, in my considered view the purchases shown by the assessee cannot be held to be bogus or non est (non existence) purchases SQ long as the sales/closing stock shown by the assessee are not held bogus. It is not the case of the AO that the sales/closing stocks shown by the assessee are unproved and bogus. Therefore, the addition made on account of disputed purchases of ₹ 34,24,522/- cannot be sustained. As stated above, the one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the remaining assessment years i.e 2005-06, 2006-07 and 2008-09 to restrict the additions to 10% disputed purchases. Aggrieved by the orders of the ld. CIT(A), the assessee and Revenue both are in appeals before us. 6. The addition to ground No. 1 raised originally inn its appeal on this issue, the Revenue has also raised a common additional ground in its appeals for assessment years 2006-7, 2007-08 2008-09 which reads as under:- On the facts and in the circumstances of the case, the Ld. CIT(A) after having accepted the fact that the purchase made from or through Shri Rakesh Kumar Gupta and his family members are bogus, erred in law in not confirming the addition at least to the extent of peak of the purchases made from such parties on account of bogus purchases made in cash from the open market out of unaccounted cash, in view of the decision held in Ahmedabad Hon ble ITAT s C- Bench decided in the case of Vijay Proteins Ltd. vs. ACIT 58 ITD 428. 7. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that a similar issue involving identical facts has already been considered and decided in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Shri Rakesh Kumar Gupta, which was later on retracted. In absence of any material brought on record against the submissions made by Shri Rakesh Kumar Gupta in his letter dated 20/12/2009 filed before the AO of the assessee the addition, if any, made in the case of the assessee will be based on presumption only and it cannot be sustained in the eyes of law. As against that assessee has submitted various evidences to show that the actual delivery of the goods was received by the assessee from the said party which has not been discarded by the AO. The addition sustained by Ld. CIT(A) is also on presumption basis. Therefore, keeping in view the facts and circumstances of the case, we are of the opinion that additions made by the AO deserves to be deleted in its entirety. We decide accordingly. 8. The above decision of the Tribunal in the case of Jeetendra Harshadkumar Textiles has been subsequently followed by the Tribunal to decide a similar issue in favour of the assessee in the case of M/s Pramit Textiles vs. ITO (ITA No. 3948 to 3953/Mum/2012 and ITA No. 4012 to 4015 and 4020 to 4021/Mum/2012 dated Ist October, 2013). As the issue involved in the present case as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance made by the A.O. u/s 14-A of the Act for A.Y. 2008-09 by applying Rule 8-D of the income Tax Rules, 1962. In so far as A.Y. 2007-08 is concerned, the disallowance u/s 14A is required to be made on some reasonable basis as held by the Hon ble jurisdictional High Court in the case of Godrej Boyce Mfg. Co. Ltd. (194 Taxman 203). In this regard, the ld. CIT(A) has held that the disallowance of ₹ 66,715/- made by the A.O. in A.Y. 2007-08 on the basis given in Rule 8-D is quite reasonable having regard to all the facts and circumstances of the case and nothing has been brought on record before us to dispute or controvert this position. We, therefore, uphold the impugned orders of the ld. CIT(A) confirming the disallowance made by the A.O. u/s 14A of the Act for both the years under consideration i.e assessment years 2007- 08 2008-09 and dismiss ground No. 2 of assessee s appeal for the said years. 12. In the result, appeals of the assessee for A.Y. 2005-06 2006-07 are allowed, appeals of the assessee for A.Y. 2007-08 and 2008-09 are partly allowed and appeals of the Revenue for assessment years 2006-07, 2007-08 and 2008-09 are dismissed. Order pronounced in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
