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2016 (3) TMI 1088 - ITAT MUMBAI

2016 (3) TMI 1088 - ITAT MUMBAI - TMI - Addition u/s 69 - unexplained/unproved purchase/investment in purchase - Held that:- There is no doubt that the AO had accepted the genuineness of sales made by the assessee. He had not made any effort to make further investigation to substantiate his allegations with regard to non genuineness of the purchases.Considering the facts and circumstances of the case,we are of the opinion that the FAA was not justified in partly upholding the additions. Reversin .....

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ved in all these appeals are common,so for the sake of convenience we are passing a single order. The AO had re-opened the assessment for the AY.2007-08,invoking the provisions of section 147 of the Act.The reasons recorded by the AO are identical to the decision taken by him for the subsequent AY.s.Therefor,we would adjudicate the appeal for the AY.s.2008-09 and2009-10 before deciding the appeal for the AY.2007-08.Assessee-HUF,is in the business of interlining cloth.Details of dates of filing o .....

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s.69 of the Act,under the head unexplained/unproved purchase/investment in purchase.During the assessment proceedings,the AO found that a survey u/s 133-A of the Act was carried out on 13/14- 2-2009 in case of Rakesh Kumar Gupta (RKG),one of the suppliers of goods to the assessee-HUF.In his statement recorded during the course of survey,RKG stated that he was providing accommodation sales bills for purchases in the name of various proprietary concerns namely M/s Manoj Mills, M/s Astha Silk Indus .....

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ade throughout India on a regular basis relatable to the alleged purchases, that the payment for these purchases were made by Account payee cheques, if the purchases were to be disallowed GP would work out to the ratio of 17.33%.The assessee produced the Xerox copies of the purchase bills along with the day to day item movement of material (quality-wise) purchased from the Gupta Group of entities.However,the AO was not satisfied with the reply and referring to statement of RKG held that the asse .....

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he First Appellate Authority(FAA). Before him,it was contended that the AO had not pointed out any discrepancies in the detailed quantitative statements furnished alongwith the copies of sales/purchases bills, that he had not pointed out any infirmities in the books of accounts or the quantitative statements filed during assessments, that merely on the statement made by a person purchases could not be termed non-genuine,that the AO had not given the assessee opportunity to cross examine the part .....

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KG to make additions in the hands of the purchaser, that he had not provided the opportunity of cross examination of RKG inspite of specific request made by it,that the assessee had submitted the day to day movement of material alongwith the corresponding sales/inventory of stock, that the books of account of the assessee were audited,there was no adverse comment by the auditors about completeness of the books of account or about the quantitative details, that if the sales were treated as genuin .....

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he AO.Authorised Representative (AR) stated that assessee had produced all the necessary documents before the AO, that copies of purchase bills and bank statement, indicating the payment through banking channels were furnished, that AO had not doubted the sales shown by the assessee .He relied upon the cases of Nikunj Exim Enterprises Pvt. Ltd.( 372 ITR 619) and Goolamally Hasanjee (ITA/3740-41/Mum/2012 -AY06-07 and 08-09, dt.10.6.14). 5. We have heard the arguments of both the sides and also pe .....

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income on 27.10.2006 declaring total income at ₹ 4,68,089/-. The said return was processed u/s. 143(1) of the Act and thereafter it was reopened and notice u/s. 148 was issued and served upon the assessee. The notices u/s. 143(2) and 142(1) were also issued and served upon the assessee. 2. The Survey operation u/s. 133A was conducted on the premises of Shri Rakeshkumar M. Gupta, Proprietor of M/s. Manoj Mills, Shri Mohit R. Gupta Prop. of M/s. Astha Silk Industries and Smt. Hema R. Gupta, .....

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mitted bills with delivery challan, the evidence of making payment through account payee cheque. The assessee also filed monthly quantitative stock reconciliation. The assessee was further asked to explain why the bogus purchases made from the aforementioned parties be not added to the income. It was explained by the assessee that the statements given by Shri Rakeshkumar M. Gupta and his family members are not correct. It was further explained that purchases and sales are duly reflected in the b .....

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M. Gupta and his family members as bogus and accordingly added the same to the returned income of the assessee and completed the assessment. 3. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A). Before the Ld. CIT(A), the assessee reiterated his submissions. After considering the facts and the submissions made by the assessee, the Ld. CIT(A) came to the conclusion that an adhoc addition of ₹ 1,35,000/- which is about 12.5% of the purchase in question would meet the e .....

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e lower authorities. We find that the entire addition has been made on the statement of one Shri Rakeshkumar M. Gupta and his family members. It is the allegation of the Revenue that the said family members were issuing accommodation bills to the assessee. The AO accordingly went on to treat the entire purchases as bogus purchases. However, we find that the sales made by the assessee have been accepted. It is an elementary rule of accountancy as well as taxation laws that profit from business ca .....

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.1. Considering the entire facts in totality and keeping in mind that no adverse inference has been drawn so far as sales are concerned, we do not find any reason for making any disallowance on this account. The adhoc addition sustained by the Ld. CIT(A) is also without any basis and the same is deleted." 5.1.We further find that in the case of Jeetendra Harshadkumar Textiles (ITA/771 and 2211 / Mum/2011 dated 21-11-2012) ,similar issue was decided in favour of the assessee,that the decisio .....

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chases and corresponding sales as under:- "We have considered the submission on behalf of the Revenue. However, from the order of the Tribunal dated April 30, 2010, we find that the Tribunal has deleted the additions on account of bogus purchases not only on the basis of stock statement, i.e., reconciliation statement but also in view of the other facts. The Tribunal records that the books of account of the respondentassessee have not been rejected. Similarly, the sales have not been doubte .....

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eals), one cannot conclude that the purchases were not made by the respondent-assessee. The Assessing Officer as well as the Commissioner of Income-tax (Appeals) have disallowed the deduction of ₹ 1.33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of ₹ .....

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