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2016 (4) TMI 29 - ITAT MUMBAI

2016 (4) TMI 29 - ITAT MUMBAI - TMI - Bogus purchases - disallowance sustained by Ld CIT(A) @ of 12.5% of the total purchases - Held that:- As asked Ld. DR to point out if there was anything wrong in the findings of Ld. CIT(A) with regard to disallowance sustained by Ld CIT(A) @ of 12.5% of the total purchases. In response, nothing wrong was pointed out by Ld. DR in the reasoning given by Ld. CIT(A). It is noted that no adverse or incriminating material, whatsoever, has been brought on record by .....

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CIT(A). - Decided against revenue. - ITA NO.2993/Mum/2013, ITA NO.2994/Mum/2013, ITA NO.3629/Mum/2012 - Dated:- 12-2-2016 - Shri Saktijit Dey, Judicial Member, and Shri Ashwani Taneja, Accountant Member For The Revenue : Shri Nitin Waghmode (DR) For The Respondent : None ORDER Per Ashwani Taneja (Accountant Member): These appeals have been filed by the Revenue against the separate orders of Ld. Commissioner of Income Tax (Appeals), Mumbai {(in short CIT(A) }, for the assessment years 2005-06, 2 .....

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ng the course of assessment proceedings, the AO asked the assessee to file the details of sundry creditors, in response to which requisite details were filed by the assessee. Thereafter, the AO called for information u/s 133(6) from the parties from whom the purchases were done by the assessee. The AO did not receive satisfactory response with respect to some of the parties and therefore, the purchases made by the assessee from these forms were treated as in-genuine and were disallowed as unexpl .....

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es, sales were not possible, and therefore, the AO could not have disallowed the entire purchases. 3.2. The Ld. CIT(A) considered the submissions of the assessee in detail, but he was not satisfied with the first contention of the assessee that whole of the amounts claimed to have been paid by the assessee for making purchases were genuine. 3.3. However, Ld. CIT(A) found merit in the alternative submission of the assessee and held that in absence of purchases, sales were not possible. The releva .....

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e any sales. 4.4.1. Accepting the sales without there being any corresponding purchases would lead to an absurd situation of sale of materials without any purchases. In the instant case also, the A.O. is not disputing the sales but treating the purchases as bogus would lead to the same absurd situation. If the sales are genuine then the fact has to be admitted that the appellant has made the purchases. 4.4.2. In the business of trading in steel and scrap, it is a general practice that purchases .....

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discussed the judgment of coordinate bench in the case of Shri Sanket Steel Traders vs ITO, (ITAT, Ahmadabad) and after analyzing the judgment he concluded as under: In view of the facts and circumstances explained above and respectfully following the decision of the ITAT, Ahmadabad on an identical issue, it would be fair and reasonable if the disallowances of purchases made by the appellant is restricted to 12.5% on the total purchases disallowed by the AO as the quantum of purchases disallowed .....

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y the assessee and therefore, disallowance made by the AO was fully deleted with regard to the said party, by observing as under: 6.1. The above arguments of the AR of the appellant have been considered and I intend to agree with these arguments. The appellant has produced the ledger account of M/s. Shree Karni Textiles along with the copies of the purchase bills with corresponding delivery challans. The balance confirmation statement of M/s. Shree Karni Textiles has been submitted during the as .....

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oes not contain telephone number. This cannot be taken as basis for disallowing the purchases. 6.2. In view of the fact that the details of the purchases have been properly recorded in the books of accounts and duly supported by the documentary evidences and the existence and confirmation of the party is placed on record, the purchases cannot be disallowed only on the ground that the bills are serially numbered and does not contain the telephone number. Therefore, the action of the AO disallowin .....

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