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2016 (5) TMI 150 - ITAT KOLKATA

2016 (5) TMI 150 - ITAT KOLKATA - TMI - Addition u/s 68 - Held that:- After considering the necessary vouchers, confirmation of accounts, bank statements, we are of the opinion that addition made by the AO and confirmed by the CIT(A) is not justified. The AO without making any enquiry and exercising its power vested under the law, simply treated the sales as not genuine and bogus and added to the income effecting into treating the said sum of sales twice to income account once as sales and secon .....

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is improper and unjustified - Decided in favour of assessee

Disallowance of general charges - For non-production of proper bills and vouchers, the AO disallowed @20% of expenses - Held that:- It is observed that no defect whatsoever was pointed out by the Assessing Officer in the vouchers produced by the assessee in support of its claim disallowed by him merely on the ground that the vouchers produced by the assessee were only self made vouchers. Keeping in view the nature of the busi .....

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ic defect in the self-made vouchers and other details produced by the assessee in support of its claim. - Decided in favour of assessee - ITA No. 415/Kol/2013 - Dated:- 23-3-2016 - Shri M. Balaganesh, A.M. & Shri S.S.Viswanethra Ravi, J.M. For The Appellant : Shri P.K. Sanghai, FCA For The Respondent : Shri Nongothung Jungio, JCIT ORDER Per Shri S.S.Viswanethra Ravi, J.M. This appeal is filed by the Revenue against the order dated 02.01.2013 passed by the CIT(Appeals)-XX, Kolkata in Appeal N .....

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he I.T. Act 1961. 2. That in the facts and circumstances of the case, the Ld. CIT(A) was wrong in dismissing the grounds of appeal against treating sale of the appellant amounting to ₹ 43,74,210/- as cash credit and thereby he erred in confirming the action of the ld.AO who added this amount to the total income u/s 68 of the I.T. Act 1961. 3. That in the facts and circumstances of the case, the Ld. CIT(A)erred in restricting the estimated disallowance of general expenses to the extent of & .....

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income of ₹ 2,24,880/-, but, under scrutiny, the AO determined the total income of the assessee at ₹ 67,56,460/-. Thereby, the AO added ₹ 65,31,586/- as against the returned income of ₹ 2,24,880/-. 4. During the assessment proceedings, regarding the addition under section 68 of the Act, the assessee said to have been received the same from M/s. Shreeji Traders out of a sales transaction. The AO could not find any sales transaction with the said M/s. Shreeji Traders from .....

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submission made before the CIT(A) as general in nature and confirmed the same addition made by the AO. 6. Before us, the A/R of the assessee contended that the AO examined the books of accounts and they are not rejected. The assessee produced every details of sales to the AO. The AO and CIT(A) examined and verified the details of sales and purchases. But both the authorities below did not reject assessee s accounts, sales and purchases. The assessee received the said amount through account paye .....

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business in local market by way of a direct sale and through broker and agent. The said sales were effected through Shreeji Traders details of invoices which placed at page 10 to 12 clearly show that the assessee raised such invoice on 26.01.2007 regarding the goods of fabric work ₹ 72,346/- in favour of said M/s. Shreeji Traders, likewise, the other invoices at pages 11 and 12 shows to establish the same. Regarding the payment of said amount to the assessee on 13.10.2006 by way of a chequ .....

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e assessee offers no explanation about the nature and source thereof. In our opinion, the assessee offered its explanation by giving information regarding its mode of business, the details of bank statements and identity of the broker through whom goods of fabric said to have been sold to M/s. Sreeji Traders. The AO having all the details and without examining the same and adding the addition is not justified. Therefore, the addition made by the AO which was confirmed by the CIT(A) is set aside .....

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ound no.1 that the assessee failed to give any reasonable explanation to the cash credits involved in the ground no.2, thereby, confirmed the AO s order. 11. Heard both representatives and perused the material available on record. The contention of the assessee before the AO, as well as before the CIT(A) that the assessee does its business in local market by way of a direct sale and through broker and agent. The said sales were effected through M/s.Asia Trading, details of invoices and confirmat .....

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details and identity proof, the AO could not verify the details of bank account and identity of the said broker under notice. The ITAT, Delhi C bench in its decision in the case of DCIT-vs- Eland international (P) Ltd. in ITA No.3424/Del/2007 dismissed the ground of the Revenue on this issue by observing as follows:- We have considered, the facts of the case and rival submissions. From the submissions made before us, it is clear that the transactions of. purchase and sale were recorded in the bo .....

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sales were bogus. The facts of the case of La Medica (supra) are different in the sense that detailed enquiries were made into the purchases made by the assessee, which were held to be bogus by the AO. It was found that the purchase consideration got deposited in a bank account of an employee in Calcutta, which was opened with the introduction of the assessee. No such enquiry was made in this case. In the case of La Medica (supra), it was also not the case that sales were effected from the purch .....

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s, bank statements and the above decision of the ITAT, Delhi bench, we are of the opinion that addition of ₹ 43,74,210/- by the AO and confirmed by the CIT(A) is not justified. The AO without making any enquiry and exercising its power vested under the law, simply treated the sales as not genuine and bogus and added to the income effecting into treating the said sum of sales twice to income account once as sales and secondly as other income. Sales was already treated as income by the asses .....

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ition of ₹ 43,74,210/-. 12. Ground no.3 involves a claim of ₹ 1,62,743/- as general charges. The case of the assessee is that it incurred such expenses for conducting business and wholly for the purpose of business affairs. For non-production of proper bills and vouchers, the AO disallowed @20% to an extent of ₹ 32,550/- on the basis of estimatation. 13. While dealing with issue in first appeal, the ld. CIT(A) disallowed 10% as against 20% made by the AO. 14. Before this Tribun .....

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er of the AO. 15. Heard and perused the relevant record. General observation of the A.O. is that the vouchers are self-made. In our view, it cannot be a basis for addition on estimation. At best, it can be a starting point for enquiry but if the vouchers were defective, the Assessing Officer should have pointed out the defects and should have asked the assessee for a reasonable explanation, which is missing in current case, hence addition, is not justified. It is observed that no defect whatsoev .....

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