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Smt. Sajjandevi B. Jain, Surat Versus Income Tax Officer, OSD-1, Range-2, Surat

ITA No. 609/Ahd./2009 - Dated:- 13-1-2012 - SHRI BHAVNESH SAINI, J.M. & SHRI A. MOHAN ALANKAMONY, A.M. Appellant By: Shri Hardik Vora, A.R. Respondent By: Shri B.L.Yadav, Sr.D.R. Order Per Shri A.Mohan Alankamony, Accountant Member : This appeal is filed by the Assessee aggrieved by the order of the ld. CIT (A)-II, Surat in Appeal No. CAS/II/245/07-08 dated 12.12.2008 for the assessment year 2005-2006 passed under section 250 r.w.s. 143(3) of the I.T. Act. 2. In this appeal, the assessee has .....

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e subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer in making disallowance of ₹ 5,118/- being 1/5th of vehicle expenses and depreciation on vehicle. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer in making disallowance of ₹ 3,849/- being 1/5th of telephone expenses. 3. The assesse .....

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32/- and declared gross profit at 9.38% as against 8.97% disclosed in the immediately preceding year. During the course of assessment proceedings, the ld. AO issued notice under section 133(6) of the Act to nine suppliers/creditors of the assessee out of which reply was received in four cases and for the others, letters were returned un-served. Thereafter, the ld. AO made a detailed investigation and arrived at the following conclusion: The assessee had made the purchases from the open market in .....

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old expenditure. Thus the assessee introduced his UNACCOUNTED INCOME for purchases of fabrics and later on by making payments to the bogus creditors the cash was received back by ibe., asseisee. Looking to the above facts and circumstances of the case, undersigned is of the opinion that books of account of the assessee are not correct and complete in the sense that the same does not reflect the actual status of affairs of the assessee and therefore liable to be rejected u/s 145(3) of the Act. Th .....

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list enclosed) which are merely book entries and have already been paid off in cash. Therefore, it is abundantly clear that trade credit shown by the assessee in balance sheet is not genuine and established credits, therefore the whole amount is disallowed and added to, the income of the assessee because corresponding assets has been created in the balance sheet. It may be reiterated that assessee might have purchase the goods in cash using her unaccounted money and only with a view to comeup th .....

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s on 31.03.2005 1 M/s. Aashirvad Textiles 48490 2 M/s. Komal Silk Traders, 48590 3 M/s. New Light Creation 47520 4 M/s. Rajeshwari Silk Mills 49277 5 M/s. Vaishali Sarees 57297 6 M/s. Ganesh Silk Fabrics 46332 7 M/s. Guru Krupa Textiles 45840 8 M/s. Image Fashion 51410, 9 M/s. Jagdamba Silk Mills 53321 25476 10 M/s Jay Duraga Textiles 11 M/s Jay Gajanan Textile 37256 12 M/s. Jain Fabrics 47720 13 M/s. Japan Textiles 26822 14 M/s. Jay Bhawani Synthetics 43950 15 M/s. Karisma Fabrics 46451 16 M/s .....

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onsidering the submissions of the assessee and the Revenue, the ld. CIT(A) sustained the addition made by the ld. A.O. The relevant portion of the order of the ld. CIT(A) is reproduced hereinbelow for reference. 6. I have carefully considered the detailed findings and conclusion of the AO, and the detailed submissions of the Assessee and the AR, both in assessment proceedings as also in the appellate proceedings. The first question which arises is that, if the Assessee had issued advance blank c .....

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were deposited in the respective accounts and were withdrawn by them, while the purchases which were treated as bogus had travelled to the accounts of certain other parties. Some of the suppliers were not the same as those who were claimed to have supplied goods to the Assessee. If the Assessee's claim of market practice is to be accepted then, the same practice would have to be applicable and evidenced in the case of all the suppliers. Similar was the difference in the bills raised by the s .....

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been answered by the AR, who has basically beaten around the bush, and has argued in very general and vague manner against the action taken by the AO. In his detailed arguments as reproduced in pages 13-14, it has been explained by the AO as to why the entire sum of ₹ 12,86,373 was to be disallowed and treated as the unexplained income/investment of the Assessee. It is for such reason that the ratio of Vijay Proteins (Supra) cannot be applied to the Assessee's case, quite contrary to t .....

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as intermediaries between the manufacturer of the cloth and the assessee, blank cheques were given to the agents, who, in turn, handed over the same to the actual sellers of the cloth. Therefore, the assessee did not have direct contact with the manufacturer of the cloths. The ld. A.R. further submitted that the AO himself has admitted for the genuineness of the purchase but has only doubted the bills to be bogus and inflated. The ld. A.R. vehemently argued that the assessee had made genuine pu .....

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-vs- ITO in ITA No.137/Ahd/2009 and M/s. Raj Exports -vs- ACIT in ITA No.1827/Ahd/2005 and M/s. Sanket Steel Traders -vs- ITO in ITA No.2801/Ahd/2008. 6. On the other hand, the ld. D R stoutly opposed to the submissions of the ld. A.R. and submitted that the decision of the ld. CIT(A) may be upheld as he has rightly come to the conclusion that the entire purchase of ₹ 12,86,373/- made by the assessee to be bogus. 7. We have heard the rival submissions and perused the materials available on .....

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assessee are not correct and are incomplete in the sense that the same do not reflect the actual state of affairs of the assessee and therefore liable to be rejected under section 145(3) of the Act. It is evident from the above that the AO s doubt was not with respect to genuineness of the purchase but his doubt was only with respect to purchase of materials from the grey market and to cover up that fact, the assessee had generated bogus purchase bills with inflated cost. Considering these facts .....

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in pages 13-14, it has been explained by the AO as to why the entire sum of ₹ 12,86,373 was to be disallowed and treated as the unexplained income/investment of the Assessee. It is for such reason that the ratio of Vijay Proteins (Supra) cannot be applied to the Assessee's case, quite contrary to the plea taken by the AR. The AO's action is therefore sustained, and the addition of the sum of ₹ 12,86,373 is confirmed . 7.1 Considering the facts and circumstances of the case a .....

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the assessee instead of the addition of ₹ 12,86,373/- added by the ld. AO and confirmed by the Ld. CIT(A). The ld. AO is hereby directed to make addition, as indicated above. Thus, this ground of the assessee is partly allowed. 8. Regarding ground nos. 2 and 3, during the course of assessment proceedings, the ld. AO observed that the assessee had claimed motor car expenses of ₹ 17,271/-. The assessee was not able to produce the bills and vouchers to establish his claim of expenditur .....

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