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Assistant Commissioner of Income-Tax Versus Jaybharat Textiles and Real Estate Ltd.

2016 (7) TMI 682 - ITAT MUMBAI

Non- genuine purchases - Held that:- Enough documentary evidences by way of purchase bills, sales bills, ledger copies of suppliers, etc., along with the fact that payments were made through cheque has been brought on record by the assessee to demonstrate that purchases made from the concerned suppliers are genuine. In addition, it is a fact on record that not only the entire purchase transaction has been reflected in the assessee's books of account but the sales effected by the concerned suppli .....

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hands, the purchases made from them by the assessee cannot be held to be non- genuine. In these circumstances, as the Department has failed to bring any substantive evidence/material to controvert the findings of the learned Commissioner (Appeals), we are not in a position to disturb the order of the learned Commissioner (Appeals). - Decided in favour of assessee - I. T. A. No. 5163/Mum/2013 - Dated:- 24-2-2016 - Saktijit Dey (Judicial Member) And Ashwani Taneja (Accountant Member) For the Appe .....

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ort "the Act"). 3. Briefly stated the facts are, the assessee-company filed its return of income on October 8, 2010, declaring a total income at ₹ 18,68,88,280. In the course of assessment proceedings, the Assessing Officer, verifying the balance-sheet of the assessee, found that the assessee has shown receipt of share application money of ₹ 100 crores from the following persons. Sl. No. Particulars Pan Amount (Rs.) 1. Avazy Realcon Pvt. Ltd. 2nd Floor, Damodar Building Sha .....

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ies Pvt. Ltd. 396, Kamat Industrial Estate Veer Savarkar Marg, Prabhadevi, Dadar, Mumbai 400 025. AABCE7462N 8,67,726 4. To verify the authenticity of the share application money, the Assessing Officer conducted enquiry by issuing notices under section 133(6) to the concerned parties. As observed by the Assessing Officer, notices issued to Gopala Holding Pvt. Ltd., Avazy Realcon Pvt. Ltd., returned back un- served by the postal subsequently. However, these two parties specifically filed their su .....

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id an amount of ₹ 13,265, and the balance amount of ₹ 10 crores was converted to share application through journal entries. Similarly, Cyra Capital Pvt. Ltd., though, claimed to have sold goods worth ₹ 30,13,00,237, till March 2011, but the assessee had paid only ₹ 13,237 and the balance ₹ 30 crores was converted to share application money. Further, the Assessing Officer found, the concerned parties though have effected sales of ₹ 36.51 crores and ₹ 55.8 .....

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hat purchases claimed to have been made by the assessee from five parties are actually bogus purchases and these five parties were used by the assessee for providing accommodation bill so as to reduce the profitability of the company. Alleged that the assessee failed to prove through proper documentary evidence the genuineness of purchases made the Assessing Officer disallowed the entire purchases of goods worth ₹ 118,64,12,141 and added back to the income of the assessee. Being aggrieved .....

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ve not only been reflected in the books of account of the assessee but also in the books of account of the concerned parties. It was submitted, the sales turnover of the concerned parties during the relevant year would suggest that the assessee is not the only person to whom they effected sales. Therefore, the doubt entertained by the Assessing Officer that concerned parties were only providing accommodation bills is not correct. It was further submitted, all these parties who effected sales to .....

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found that the assessee during the relevant previous year has recorded sales of ₹ 537 crores and declared the net profit of ₹ 26.24 crores. The gross profit rate shown by the assessee is 14.54 per cent. which is comparable to the gross profit rate shown in the preceding assessment year. He also found that though the Assessing Officer has treated the purchases made by the assessee as bogus but he has not doubted the sales turnover of the assessee. He also noticed that the five parties .....

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the Assessing Officer and such transaction are not only supported by proper purchase and sale bills but also reflected in the books of account of the purchaser as well as sellers which were subjected to statutory audit they have to be accepted as genuine, more so, when the Assessing Officer had no evidence to establish the fact that purchases made by the concerned five parties are bogus. He observed, if the addition of ₹ 118.64 crores is sustained, then the assessee's gross profit rat .....

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Exports P. Ltd. [2009] 319 ITR (St.) 5 (SC). The learned Commissioner (Appeals) observed, the Assessing Officer even after thorough scrutiny has not pointed out any defect or discrepancies in the books of account. Moreover, the books of account are duly audited as per the statutory provisions. Therefore, not accepting the books of account of the assessee amounts to rejection of book results, even though there is no specific defect or deficiency pointed out by the Assessing Officer. Thus, the le .....

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s by producing supporting evidence. The learned Departmental representative submitted, initially the concerned parties were not found in the addresses mentioned by the assessee though he admitted that all the parties have appeared before the Assessing Officer and responded to the notices issued by him. Referring to the statements recorded from the chairman of the assessee-company as well as representative of the selling companies the learned Departmental representative submitted, reading of the .....

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ccepting sale of goods to the assessee. He submitted, all the parties produced copies of their books of account, balance-sheet, etc., to show that the sales effected by them by the assessee are not bogus. He submitted, despite the fact that the Assessing Officer had verified all these documentary evidences produced before him, only on presumption/surmises, he has treated the purchases made by the assessee as bogus. The learned counsel submitted, material on record would show that sales turnover .....

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transaction has been reflected not only in their books of account but also the financial statements forming part of statutory audit report. He, therefore, submitted, when the entire sales transaction have been reflected in their books of account and declared in their return of income and accepted by the concerned Assessing Officer where they are assessed, a part of share transaction entered with the assessee cannot be treated to be bogus. The learned counsel submitted, gross profit rate shown b .....

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ions of the parties and perused the orders of the Departmental authorities. It is apparent from the observations of the Assessing Officer that he has considered the purchases made from the five parties referred to in the earlier part of the order alleging non- furnishing of certain details stated to have been called for by the Assessing Officer. However, on a reading of the assessment order itself, it becomes clear that in course of assessment proceedings, in response to notices issued under sec .....

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assessee-company and from the representatives of the suppliers, there is nothing to suggest that the sale/purchase transactions between the suppliers and the assessee are non-genuine. On the contrary, it is a fact on record that all the suppliers in response to the notices issued by the Assessing Officer have not only confirmed of having effected sales to the assessee but in the course of examination by the Assessing Officer, have admitted of having effected sales to the assessee. As could be se .....

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are available before the Assessing Officer. It is also evident that before the Departmental authorities, they have produced documentary evidence to show that these transactions have not only been reflected in their books of account but also disclosed in the audited statement of accounts such as balance-sheet, profit and loss account forming part of the return of income filed by them for the impugned assessment. It is also evident, before the Assessing Officer the assessee has produced purchase a .....

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the assessee for the impugned assessment year at 14.54 per cent. is comparable to the gross profit rate shown in the preceding as well as the subsequent assessment year. Another crucial fact which commands consideration is, all the suppliers are Income-tax assessees and as per the evidence produced on record they have disclosed these sale transactions in the books of account as well as return filed by them. However, no adverse inference has been drawn in respect of sales made by them by the conc .....

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