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2016 (7) TMI 112 - GUJARAT HIGH COURT

2016 (7) TMI 112 - GUJARAT HIGH COURT - TMI - Addition of profit margins on alleged unaccounted sales - disallowance of bogus purchase - Held that:- As decided in Sanjay Oil Cake Industries v. Commissioner of Incometax [2008 (3) TMI 323 - GUJARAT HIGH COURT ] though the purchases are shown to have been made by making payment thereof by Account Payee Cheques, the cheques have been deposited in Bank Accounts ostensibly in the name of the apparent sellers, thereafter entire amounts have been withdr .....

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has partly confirmed the order passed by the Assessing Officer as well as order passed by the CIT (Appeals) and has held that the AO and CIT (Appeals) have not justified in making the disallowance of ₹ 44,250/- on proportionate basis and thereby deleted the disallowance. 2. While admitting this matter, the Court has framed the following question of law: Whether, in the facts and circumstances of the case the ITAT was right in law in confirming the addition of profit margins on alleged unac .....

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not given any document so far and therefore today he has shown his inability to produce the same on record. Today, also a request is made to adjourn the matter. 5. On the other hand, learned Counsel for the respondent has contended that the issue involved in the matter is squarely covered by a decision of this Hon'ble Court in case of Sanjay Oil Cake Industries v. Commissioner of Incometax as reported in [2009] 316 ITR 274 (Guj) and submitted that the said view may be adopted. 6. Having hear .....

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assessee were genuine in as much as the details furnished by the assessee establish the vehicles in which the goods were brought to the premises of the assessee, the total quantity of the goods received by the assessee, the consumption of such goods by the assessee after reflecting the same in the stock book production of oil and sales thereof, and accounting of the profits in the Books of Accounts regularly maintained by the assessee. However, the Commissioner (Appeals) accepted the finding of .....

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urchased from third parties in the regular Books of Account. Accordingly, Commissioner (Appeals) came to the conclusion that 25% of the value of the purchase price could not be treated as genuine, or in other words,the purchase price to the extent of 25% was inflated and hence the addition made by the Assessing Officer was accordingly restricted to 25% of the amount paid to the parties from whom the Assessing Officer had disallowed the entire purchases. 8 Being aggrieved with the order made by C .....

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rder dated 29.09.1994 rejected the application moved by the assessee holding that there was no apparent error on record which would permit the Tribunal to undertake review of its own order. That in fact, the Tribunal had duly considered all the papers/documents filed before the Tribunal both by revenue and the assessee and the Tribunal was not in a position to discuss each and every line of the Paper Book in the body of the order. 9 Mrs. Swati Soparkar, learned Advocate appearing on behalf of th .....

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erials in similar manner from other parties and had paid the same purchase price; secondly the charts also reflected purchases by persons other than the assessee from third parties engaged in similar line of business reflecting the same purchase price. It was contended that on the basis of the aforesaid pieces of evidence no ground was made out for retention of addition to the extent of 25% of the value of purchase. That once the Tribunal had found that purchases were genuine, goods had been rec .....

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e by A/c. Payee Cheques by the assessee etc., to submit that not a single piece of evidence had been considered or found to be false by the Tribunal so as to warrant any addition. 10 Mr. B.B.Naik, learned Standing Counsel appearing for Revenue submitted that the order made by the Assessing Officer was a detailed order. That for the reasons assigned by the Assessing Officer the Tribunal was not justified in holding the purchases to be genuine and granting relief to the extent of 75% without any b .....

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and no interference is called for. The CIT(A) has gone through the purchase prices of the raw material prevalent at the time and rightly came to the conclusion that the disallowance to the extent of 25% was called for. It is established that the parties were not traceable; they opened the bank accounts in which the cheques were credited but soon thereafter the amounts were withdrawn by bearer cheques. That fairly leads to the conclusion that these parties were perhaps creation of the assessee i .....

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nfirm the finding of CIT(A). 12 Thus, it is apparent that both Commissioner (Appeals) and the Tribunal have concurrently accepted the finding of the Assessing Officer that the apparent sellers who had issued sale bills were not traceable. That goods were received from the parties other than the persons who had issued bills for such goods. Though the purchases are shown to have been made by making payment thereof by Account Payee Cheques, the cheques have been deposited in Bank Accounts ostensibl .....

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