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2016 (4) TMI 956 - ITAT MUMBAI

2016 (4) TMI 956 - ITAT MUMBAI - TMI - Determination of income - bogus purchases - Held that:- AO had disallowed an amount under the head unproved purchases, that in the rectification proceedings carried out on two occasions he reduced it to ₹ 7.54 Crores, that he had issued notices u/s.133(6)of the Act on test check basis, that during the appellate proceedings the FAA had forwarded certain documents to the AO and had called for his comments, that the successor AO alleged many an irregular .....

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and the annextures to the letters were available on the file of the AO. In thses circumstances, we are of the opinion that the findings of facts recorded by the FAA with regard to the purchases in question present the true picture and the comments of the AO made in his letter 13.11.2013 were factually incorrect. It is also a fact that the AO had not rejected the books of accounts maintained by the assessee, nor has doubted the genuineness of the sales made by it. In the matter of Nikunj Exim En .....

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sessee. - ITA No. 1711/Mum/2014 - Dated:- 10-2-2016 - Rajendra, AM And Ram Lal Negi, JM For the Petitioner : Shri Vinay Deshmane, Pawan Sharma & Prakash Patodia For the Respondent : Shri B C S Naik, DR ORDER Per Rajendra, AM Challenging the order, dated 02.12.2013, of CIT(A)-20, Mumbai, the Assessing Officer (AO) has filed the present appeal. Assessee-company, engaged in the business of trading and processing of raw fish and export of sea food, filed its return of income on 13.10.2010. The A .....

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the parties, on test check basis, from whom the assessee had made purchases. He found that in most of the cases notices were served but the parties had not filed any details. The AO was of the opinion that purchases to the extent of ₹ 17.38 crores, in respect of 16 parties, had not been proved. He issued a show cause notice u/s. 142(1)of the Act. After considering the submissions of the assessee dt . 22.01.2013, 30.01.2013 and 27.02.2013, the AO held that in majority of cases notice issued .....

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the confirmation letters filed by the assessee did not prove the nature of transaction, that there were incomplete details, that the assessee had booked fictitious purchases to inflate the expenditure and to reduce the profit. Finally, he made a disallowance of ₹ 17,38, 01,213/-. 3. Aggrieved by the order of the AO the assessee preferred an appeal before the First Appellate Authority(FAA). Before him, it was submitted that all the details, confirmations from the suppliers, ledger accounts .....

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rrival report was prepared at the factory site, that in the material arrival report details like varieties, accounts, weight agreed and total value of the goods was mentioned, that the report was countersigned by both the parties, that final material arrival report was being maintained by the assessee, that the AO had wrongly disallowed the genuine purchases and had brushed aside the reliable evidences, that by letter dt.27.2.2013 the AO was made aware of the submission of the confirmations, tha .....

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o the tune of ₹ 16,37,87,197/- were not genuine, that the documents submitted by the assessee were incomplete or were not filed at all, that the assessee except for submitting ledger account had not furnished any substantive evidence, that the bank statement were filed only in one case, that no bank details were filed in respect of 12 parties, that it had not filed invoices for purchase in 10 cases, that the stock register was not submitted, that the claim of expenses made by the assessee .....

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ting raw material for such supplies, that assessee had submitted copy of invoices during the course of scrutiny assessment, that vide letter dt.30.1.13 the assessee had furnished copies of raw material reports along with sample copies of invoices, that the AO had not asked to submit the stock register. After considering the submissions of the AO and the assessee, the FAA held that the AO had disallowed purchases of ₹ 17.38 crores without any valid reason and without rejecting the genuinene .....

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elevant extract of respective bank account of the suppliers, that the basic evidences were provided to the AO, that the assessee had filed reconcilliation statement vide its letter dt.27.2.13, that assessee had submitted copies of acknowledgement of return of income of the suppliers. He further held that if the evidences produced by the assessee were not genuine and the payments made through banking channels were not satisfactory it was the legal responsibility of the AO to make further investig .....

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led complete documents, that the AO in its letter 13.11.2013 had made certain factually incorrect observations, that the letter of the assessee dated 27.2.13 and 23.9.2013 clearly proved that confirmation of 16 suppliers, copies of relevant extract of bank statement and copies of reconciliation statement were filed by the assessee, that six of the creditors were not fish suppliers, that question of submitting of raw material report in such cases did not arise, that the assessee had submitted cop .....

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teness of books of account u/s. 145(3) of the Act. The FAA referred to the case Sanchita Marine Products Pvt. Ltd. (15 SOT 280) and Hi Lux Automatic (P.)Ltd. (IT Appeal No.A33 of 2007 of Hon ble Delhi High Court dt.23.3.2009. He also referred to the case of Nikunj Exim Enterprises Pvt. Ltd. of the Hon ble Jurisdictional Hugh Court. Finally, the FAA directed the AO to delete the entire disallowance made under the head purchase expenses. 4. Before us, the Departmental Representative(DR)supported t .....

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entative(AR)supported order of the FAA and made the same submission that were made before the FAA. 5. We have heard the rival submissions and perused the material before us. We find that initially the AO had disallowed an amount of ₹ 17.38 Crores under the head unproved purchases, that in the rectification proceedings carried out on two occasions he reduced it to ₹ 7.54 Crores, that he had issued notices u/s.133(6)of the Act on test check basis, that during the appellate proceedings .....

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