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2016 (6) TMI 488 - ITAT KOLKATA

2016 (6) TMI 488 - ITAT KOLKATA - TMI - Addition on account of carriage inward expenses - Held that:- AO before disallowing the expenses has failed to consider the claim of the assessee of such expenses in the earlier years to arrive at the view whether the expenses claimed are more or less. The AO has not pointed out any flaw in the books of accounts. The AO should have verified these expenses with regard to the purchase claimed by the assessee. We also find that the vouchers in support of the .....

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e alleged income as the onus is on the Revenue to prove the actual expenditure and then establish that the source of money spent for such expenditure had not been satisfactorily explained by the assessee. Therefore considering the totality of the case, we are of the considered view not to interfere in the order of ld. CIT(A) - Decided against revenue

Addition on account of bogus purchase - Held that:- From the facts of the case, we find that the AO has disallowed the purchases merely .....

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purchase of the materials are very much placed on record. Therefore, in our considered view, merely notice issued u/s. 133(6) of the Act cannot be the sole ground for making the disallowance - Decided against revenue

Addition on account of bogus sundry creditors - Held that:- AO in the instant case has failed to verify the payment made to the parties through banking channel from the party. In support of payment, the assessee has submitted the bank statement which is placed on pages 1 .....

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not rejected the purchase bill as submitted by assessee at the time of framing of assessment under consideration. The order of AO is silent about the copy of the ledger and confirmation of account by the party submitted by the assessee. Therefore, in our considered view, the amount of credit balance as appearing in the ledger of the party cannot be regarded as unexplained cash credit. - Decided against revenue - ITA No. 1055/Kol /2013 - Dated:- 10-6-2016 - Shri Waseem Ahmed, Accountant Member An .....

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d 07.12.2010 for assessment year 2008-09. 2. At the very outset, we observe a delay of as many as 14 days in the filing of its appeal by Revenue, which through stands suitably explained per are accompanied affidavit by the concerned official of the Revenue. Ld. AR for assessee submitted that considering delay he should not be having any objection to the Bench if considering the delay of condonation. This, in our considered opinion, on the facts and circumstances of the case, i.e., in this case d .....

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in deleting ₹ 29,11,129/- on account of bogus purchases 3. That, on the facts and in the circumstances of the case, Ld. CIT(A) ought not to have relief much on banking transactions despite the unknown or bogus nature of identity of the suppliers, in the light of the jurisdictional High Court decisions in CIT-v-Precision Finance (P) td [208 ITR 254] or in CIT-v-United Commercial & Industrial Co (P) Ltd [187 ITR 596] 4. That, on the facts and in the circumstances of the case, Ld. CIT(A) .....

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leting ₹ 3,66,182/- on account of bogus sundry creditors in violation of the Hon'ble Calcutta High Court s decisions (supra), laying too much emphasis on VAT records. 7. That, on the facts and in the circumstances of the case, Ld. CIT(A) ought to have considered that the assessee got fair opportunity of hearing before passing of the assessment order and so, the latter cannot take plea of denial of natural justice in the light of the Hon'ble Calcutta High Court decision in Hindustha .....

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d style M/s K.D. Enterprise. During the year under consideration assessee filed its return of income showing an income of ₹ 5,30,632/- under the business head. The assessee during the year has claimed carriage inward charges amounting to ₹ 8,24,320/-. The assessee maintained handmade vouchers containing the detail of vehicle number in support of its expenses. It was observed by the Assessing Officer that there was no detail regarding the name and address of the party to whom payment .....

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d the copies of the vouchers and explained that carriage inward charges were paid directly to the drivers and helpers in cash. All the vouchers contain the name of the drivers as well as truck numbers so disallowance of 50% of the total expense is hardship on it. Ld.CIT(A) keeping the volume of transaction of the business of the assessee restricted the disallowance to 25% of the total carriage inward expenses claimed by observing as under :- 4.1 I have considered the submissions of the A/R and p .....

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nature of vouchers, ad hoc disallowance on estimate basis @ 25% of the said expenditure would be justified and reasonable. I, therefore uphold the disallowance to the extent of ₹ 2,06,080/- out of the disallowance of ₹ 4,12,160/- made by the AO. The appellant thus gets relief of ₹ 2,06,080/- [Rs.4,12,160 - ₹ 2,06,080]. Ground No.2 is partly allowed. Being aggrieved by this order of ld.CIT(A), Revenue is in appeal before us. 7. Before us Ld. DR has submitted that there we .....

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sign on vouchers and he relied upon the order of Ld. CIT(A). 8. We have heard the rival contentions of both the parties and perused the material available before us. From the aforesaid discussion we find that the AO has disallowed carriage inward expense amounting to 50% of the total expense claimed by the assessee due to non availability of supporting evidence. However the Ld.CIT(A) has reduced the expense disallowance from 50% to 25% considering the volume of the expenses and non-verifiable na .....

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t to provide the necessary details of the parties to whom the payment was made. However we find that the AO before disallowing the expenses has failed to consider the claim of the assessee of such expenses in the earlier years to arrive at the view whether the expenses claimed are more or less. The AO has not pointed out any flaw in the books of accounts. The AO should have verified these expenses with regard to the purchase claimed by the assessee. We also find that the vouchers in support of t .....

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too, to make arbitrary additions to the alleged income as the onus is on the Revenue to prove the actual expenditure and then establish that the source of money spent for such expenditure had not been satisfactorily explained by the assessee. Therefore considering the totality of the case, we are of the considered view not to interfere in the order of ld. CIT(A). Hence this ground of Revenue s appeal is dismissed. 9. The common inter-connected issue raised in both the ground no.2 & 3 are th .....

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a Tara Enterprise Rs.9,87,036/- (purchase) Insufficient address 3 M/s Kali Enterprise Rs.2,53,949/- (purchase) Not known 4 Sri Chandi Samanta Rs.67,048/- (purchase) Not known 5 Sri Ganesh Mete Rs.1,90,539/- (purchase) Not known 6 M/s Mahamaya Enterprise Rs,67,830/- (purchase) Not known 7 M/s Sunny Traders Rs.13,44,727/- (purchase) Not known AO on the basis of above observation has disallowed the purchase amount claimed by the assessee amounting to ₹ 29,11,129/- as bogus purchases. 11. Aggr .....

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assessee. The assessee has also produced the ledgers of the respective parties appearing in his books of account along with their confirmation. Accordingly the ld. CIT(A) considering the facts and circumstances has deleted the addition made by the AO on account of bogus purchases by observing as under:- 5.5 I have considered the written submissions, remand report and counter replies of the appellant and also gone through evidence on record. In the assessment order as well as in the remand report .....

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ral reminders were issued to the AO during long span of time to collect the details from the Banks and after verification of the purchases, to report accordingly. According to the statements obtained by the AO from different banks through which transactions took place., it is found that the appellant has made purchases from the aforesaid six parties through banking channel, the details of which are given in the remand report of the AO dated 07-01-2013. The appellant also filed bills from all the .....

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the parties through account payee cheques and the same were confirmed by the banks, makes the question of identity of the creditors fall into oblivion and it becomes absolutely irrelevant. Considering the totality of the facts and circumstances of the case and evidences placed on record in support of purchase transactions and payment details, there remains hardly any scope to doubt the purchase made by the appellant from the aforesaid six parties. That being so, the addition of ₹ 29,11,12 .....

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ce in the quantity of the purchase bill and in some of the purchases bills there was overwriting in the bills of the purchase. The contention of the assessee that the payment was made in cheque was not correct. As in many cases, payments were in cash which was below ₹ 20,000/-. The ld. DR in support of his claim relied in the judgments of Hon ble Calcutta High Courts in the case of CIT Vs. Precision Finance private Limited 208 ITR 254 AND CIT Vs. United Commercial & Industrial co. (P) .....

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ently supported the order of Ld. CIT(A). 13. We have heard the contentions of both the parties and perused the materials on record. From the aforesaid findings, we find that AO has disallowed the purchases on the ground that notices issued to the parties u/s.133(6) of the Act were returned back as unserved. However, Ld. CIT(A) have granted to assessee by having reliance on the books of account and detailed financial statement, confirmation obtained from the bank of the assessee in response to th .....

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by the Chartered Accountant, the confirmation received from the bank regarding the payment made to the aforesaid parties in response to the notice u/s. 133(6) of the Act. In the instant case, all the details relevant to the transaction for the purchase of the materials are very much placed on record. Therefore, in our considered view, merely notice issued u/s. 133(6) of the Act cannot be the sole ground for making the disallowance. In holding so, we find the support from the following judgments .....

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es may not be sacrosanct - it cannot be said that a transaction, which takes place by way of cheque, is invariably sacrosanct. Once the assessee has proved the identity of his creditors, the genuineness of the transactions which he had with his creditors, and the creditworthiness of his creditors, vis-à-vis the transactions which he had with the creditors, his burden stands discharged and the burden then shifts to the revenue to show that though covered by cheques, the amounts in question .....

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also failed to bring anything on record contrary to the argument advanced by Ld. AR. The facts of the case relied by the Revenue in the case of CIT Vs. United Commercial & Industrial co. (P) ltd. 187 ITR 596.Ld. are different as in that case it was held that It was necessary for the assessee to prove prima facie the identity of his creditors, the capacity of such creditors to advance the money and lastly the genuineness of the transactions. Only when these things are proved by the assessee p .....

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ged lenders and that those lenders actually had any funds of their own out of which loans could have been advanced to the assessee. The only inference is that the assessee has managed to get the confirmatory letters from the payee just as it had managed to get the bogus hundis. The transactions as well as the hundis and confirmatory letters are collusive, fictitious and false. Therefore, assessee has not discharged the initial onus in proving the loans as genuine. In the aforesaid case as relied .....

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so we adjudicate them together, is that ld. CIT(A) erred in deleting of ₹ 2,00,547/- on account of undisclosed investment. The AO during assessment proceedings found some mismatch in the figures of purchased shown by the assessee from the parties and in the figures of sale shown by the parties in response to the notice issued u/s 133(6) of the Act. The details of such parties are as under:- Sl. No. Name of the concern Amount of sale/Sr.Dr. reported (Rs) Your purchase/ Sr.Cr. claim (Rs) Dif .....

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eved, assessee preferred an appeal before CIT (A) who deleted the addition made by AO. Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 16. At the outset, it was observed that in the identical issue raised by Revenue in grounds No. 2 & 3, the additions made by AO has already been deleted by us in Para No. 10 to 12 of this order. In our considered view same analogy shall also be applied to these grounds of appeal. Hence, Revenue s grounds of appeal are dismissed. 17 .....

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the total income of assessee. 18. Aggrieved, assessee preferred an appeal before Ld. CIT(A), who deleted the addition by observing as under:- 7.2 Identical issue vide grounds No. 3 & 4 has been dealt with in this order above vide paras 4 to 4.5 wherein also the AO on the alleged ground of insufficient address of the parties doubted the purchases and made addition. In the remand report, the AO has only pointed out that after collecting information from banks, some irregularity was found in t .....

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dence is brought on record, which the AO failed to do so. Further, the appellant has filed a confirmation letter from the said party showing closing balance of ₹ 3,66,182/- as on 31-03-2008. The appellant also conducted VAT audit under West Bengal Value Added Tax Act. In view of above and for the reasons discussed in para-4-5 above, I am of the considered view that the appellant has discharged his initial onus of proving the genuineness of transactions and that being so, there is no justif .....

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20. From the aforesaid discussion, we find that AO has issued a Notice u/s.133(6) of the Act to the party, Maa Tara Suppliers which was returned to AO as unserved , therefore, in the absence of the verification, the AO has made the addition of the credit balance appearing in the ledger of the party as cash credit. The addition made by AO was deleted by Ld. CIT(A) as discussed aforesaid. Now the question before arises so as to whether the credit amount appearing in the ledger of the party amounts .....

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