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2016 (9) TMI 711 - ITAT CHENNAI

2016 (9) TMI 711 - ITAT CHENNAI - TMI - Estimation of inflation of purchases - addition on the basis of statement collected during survey - Held that:- The assessee has categorically stated that it is maintaining collection centres and payments are made to the farmers from there. There is no third party evidence towards purchase cost of milk legally. Payments were made on the basis of own vouchers which are maintained by the assessee. Though the Assessing Officer estimated the inflation of purch .....

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ry value. Any admission during such statement cannot by itself be basis for addition. Being so, in our opinion, the addition on the basis of statement collected during survey cannot be basis for addition. - There is a decline in gross profit rate as compared to assessment year 2010-11, 2011-12. The assessee is not able to explain decline on the gross profit at 14.03% as compared to earlier assessment years. In our opinion, to settle the dispute, it is appropriate to take average gross profit .....

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ails of gross profit rate of all the two immediate earlier assessment years to the Assessing Officer. The Assessing Officer shall consider the same and decide the issue in accordance with our findings as above. - Decided in favour of assessee for statistical purposes. - I.T.A.No.1810/Mds/2016 - Dated:- 5-8-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER For The Appellant by : Shri N.C Ravikrishnan, ADvocate For The Respondent by : Shri A.V Sreekanth, JCIT .....

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a belief that the same modus operandi has been followed in the earlier year in generation of unaccounted cash is not warranted. 03. The Commissioner of Income Tax (Appeals) erred in upholding the disallowance by the learned Assessing officer that, despite the huge volume of transactions, the appellant would be able to give all the details called for in short notice. However, the additions based on the statements during the Survey in subsequent year cannot be the basis of addition on surmises. 04 .....

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1.4.2011 of Rs. 4,33,62,85 as on 1.4.2011. Further, there was a survey u/s 133A of the Act at the business premises of the assessee on 6.11.2013. In response to Question No.24, the partner of the assessee-firm, Shri Ramasamy stated that the assessee has boosted up the creditors and agreed to offer a sum of Rs. 2 crores as additional income and pay taxes thereon. Further, even after giving sufficient opportunity to the assessee, the assessee has not furnished the details of milk suppliers and the .....

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collection agent as bogus creditor. The assessee has not explained how this is worked out or the names of the actual creditors were not filed. The Assessing Officer after going through the above statement assessed the overstated purchase price of the milk at Rs. 2/- per litre. In other words, the assessee purchased total milk worth Rs. 1,17,41,76,667/- and the increase in creditors works out to 5.61% of the purchases. In other words, according to the Assessing Officer, the assessee has inflated .....

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furnished any confirmation from various creditors. Thus he confirmed the above addition against which the assessee is in appeal before us. 4. The ld. AR submitted that the Assessing Officer never disputed the books of account of the assessee as not reliable or verifiable, therefore, accepted the books of account as correct. The Assessing Officer precluded from estimating the income of the assessee by holding that purchase was inflated without rejecting the books of account. According to the ld. .....

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Further, he submitted that the survey conducted after the close of the financial year which is on 6.11.2013 cannot be relied up on for the purpose of assessment of assessment year 2012-13 whereas the previous year ended on 31.3.2012. Further he submitted that there is a jurisdictional High Court judgment in the case of CIT vs S. Khader Khan Son, 300 ITR 157 wherein held that sec. 133A does not empower any income tax authority to examine any person on oath, hence, such statement has no evidentiar .....

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d that even if one compare the gross profit rate of the assessee for the earlier assessment year which is at par, there is no question of any estimation of inflated purchase cost towards milk purchases. The ld. Representative submitted that the details of the gross profit rate for he earlier two assessment years and subsequent to two assessment years. 5. On the other hand, the ld. DR argued that in this case, the Assessing Officer made detailed enquiry and had given elaborate reasons or making a .....

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e by the assessee during the course of survey. The gross profit rate of the present assessment year is at par with earlier assessment years cannot be a conclusive evidence regarding the genuineness of the creditors appearing in the books of account of the assessee. The assessee in this case is in the habit of introducing bogus creditors in the books of account, therefore, no evidentiary value could be given to the argument of the assessee. He finally relied on the orders of the lower authorities .....

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essing Officer made estimation of inflated purchase on the reason that the assessee has not furnished the confirmation letters from the creditors. The assessee pleaded before the Assessing Officer that there are large number of milk vendors who were form villages and they exactly not maintained any books of account to show that what exact amount was outstanding to them for the supply of milk. The assessee has categorically stated that it is maintaining collection centres and payments are made to .....

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