TMI Blog2016 (5) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... ely 30% of the sales and in the balance-sheet under “advance and deposits” a sum of ₹ 39,15,975/- is shown as advance to M/s. Thakorbhai & Co., Amalsad, Navsari. These types of financial transactions raise a question as to whether the assessee has entered into these transactions as a trader of agricultural goods or as a commission agent. We are, therefore, of the view that there are series of questions which remained unanswered in the order of the ld. Assessing Officer and more specifically about the distinction between the type of activity of which the assessee is actually engaged into has not been brought on record which needs to prove that whether the assessee is a commission agent or a trader of agricultural products. We, therefore, set aside the matter to the file of the ld. Assessing Officer to examine various issues discussed above and pass a fresh assessment order after giving proper opportunity of being heard to the assessee and while framing fresh assessment order, he should be clear to assess as to whether the assessee is a commission agent or a trader and then proceed further to deal with the related issues. - Decided in favour of Revenue for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss account. A show-cause notice dated 09.12.2011 was served upon the assessee on 10.12.2011 by the Assessing Officer which is reproduced herein below:- Please refer to this office letter of even umber dated 21.11.2011 on the above subject. 2. In the above referred letter, you were requested to produce the details of identity/postal address of parties from you have purchased chickoo to verify details of goods i.e. quantity quality of goods total value. But, you have not given identity proof of the parties. Purchase bills for verification of quantity, quality and value of the goods have also not produced. 3. As per written submission dated 25.11.2011 during the FY 2008-09 for AY 2009-10 you have dealt in chickoo, an agriculture product. Details of cash purchases are as under: Cash purchase as per letter dt. 25.11.2011 Rs.98,62,028/- Credit purchase Rs.68,15,415/- On verification of the books of accounts, it is found that out of total credit purchase of ₹ 68,15,415/-, you have made payment of ₹ 28,84,240/- by cheque / DD and payment of ₹ 30,44,214/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards the addition on account of bogus purchases and also against the action of the Assessing Officer in making addition without rejecting the books results of the assessee. The ld. CIT(A) observed following while deleting the addition for bogus purchases of ₹ 53,74,494/-:- I have considered the observation of the AO in the assessment order as well as the contention raised by the AR of the appellant in the written submission. The AO while farming the issue seems to have diverted himself and routed through a path whereby he himself has contradicted his findings. He has ignored the very fact that the appellant is dealing with the business of perishable agriculture produce (Chikoo) and simply disregarded the details, quantitative records, books of accounts and sample invoices furnished before him. The AR of the appellant has very rightly advanced his arguments raising couple of questions emphasizing the fact that as such the purchase or sales does not have any impact on his total income as both are the identical figures. One cannot expect an appellant to keep the identity records of the farmers as the priority for that matter for the appellant is the business and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y basis to avoid risk of total loss. The ld. Authorized Representative also submitted that all the audited books of accounts were furnished before the ld. Assessing Officer during the course of assessment proceedings and daily inward and outward register were shown to establish the genuineness of sales and purchases and no defect was pointed out by the ld. Assessing Officer. Ld. Authorized Representative also submitted that the provisions of Section 40A(3) of the Act in regard to cash payment exceeding the limits mentioned therein are not applicable to the appellant due to the application of Rule 6(DD)(e) of the Act which relates to payment made for purchase of agricultural produce and no disallowance under sub-section (3) of section 40A of the Act is called for such payment, even if payment exceeding ₹ 20,000/- are made otherwise than by an payee cheque or draft. The ld. Authorized Representative further submitted that the decision of M/s. Vijay Proteins Ltd (supra), as relied upon by the ld. Assessing Officer while making addition, is simply not applicable to the case of the appellant, because in the case of Vijay Proteins Ltd (supra), the assessee was dealing in oil cakes, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer also. No defect has been put forth by the ld. Assessing Officer in the financial statements and stock records furnished by the assessee during the course of assessment proceedings and the books of accounts have not been rejected u/s 145(3) of the Act. Further, the decision of M/s. Vijay Proteins Limited (supra) is also not applicable to the case of assessee as the facts and circumstances in M/s. Vijay Proteins Limited (supra) are different from the facts discussed in the case of the assessee. The only reason for making the addition was that the assessee was unable to prove the genuineness of purchases; whereas in respect of sales, the same has been accepted by the Revenue. If the sales are accepted, then certainly there is a corresponding purchases and the disallowance of purchases for ₹ 53,74,494/- certainly gives impossible results in the form of gross profit, because if the administrative charges of ₹ 13,63,768/- are added to the impugned bogus purchases of ₹ 53,74,494/-, the resultant gross profit would be ₹ 67,38,262/- which in percentage to sales will arrive at 37.42%, which is certainly impossible for the type of business carried on by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o these transactions as a trader of agricultural goods or as a commission agent. We are, therefore, of the view that there are series of questions which remained unanswered in the order of the ld. Assessing Officer and more specifically about the distinction between the type of activity of which the assessee is actually engaged into has not been brought on record which needs to prove that whether the assessee is a commission agent or a trader of agricultural products. We, therefore, set aside the matter to the file of the ld. Assessing Officer to examine various issues discussed above and pass a fresh assessment order after giving proper opportunity of being heard to the assessee and while framing fresh assessment order, he should be clear to assess as to whether the assessee is a commission agent or a trader and then proceed further to deal with the related issues. Accordingly, this appeal of the Revenue is allowed for statistical purposes. ITA No.917/Ahd/2012 in the case of assessee M/s. Thakorbhai Co. 13. In this appeal, the Revenue has raised following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting t ..... 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