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TMI Blog2011 (11) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... not maintainable as the issue is at its infancy. In the remaining grounds, the issues agitated being elaborate and illustrative in nature, they are reformulated in a concise manner, for the sake of clarity, as under: (i) the Ld. CIT (A) had erred in confirming the stand of AO in adding Rs. 52.95 lakhs u/s 69 of the Act; - alternatively, if the addition is sustained, corresponding deduction u/s 37 of the Act be allowed; & - without prejudice, the estimated disallowance at 50% out of the purchases being highly excessive which requires to the appropriately reduced; & (ii) the Ld. CIT (A) had erred in not allowing consequential higher deduction u/s 80HHC of the Act. II. ITA NO.1954/2005 - By the Revenue: 2.1. Even though the Revenue had raised five grounds in its grounds of appeal, the crux of the issue is confined to a lone ground, namely - "the Ld. CIT (A) had erred in deleting the addition of Rs. 52.95 out of Rs. 1.05 crores made by the AO on account of bogus purchases u/s 69C of the Act." 3. As the issues raised by the rival parties pertaining to the same assessment year, both the appeals were heard, considered and disposed off, for the sake of convenience and clarity, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see to file details and also gave opportunity for cross examination which was not availed of. 2.14. However, exports were made, foreign exchange earned and there is no evidence that the money withdrawn by the purchase parties came back to the appellant, quantitative tallies are maintained and there are no defects in books of accounts. 2.15. It is however, for the appellant to produce the best possible evidence in support of his contention so as to enable the AO to verify the same. In the case of the appellant the fact that purchases have been effected is not disputed, but, what is disputed is that the purchases from some of the parties are not amenable to proper verification as such parties in their statements before the assessing officer denied the purchases and, subsequently, did not appear despite reasonable opportunity. 2.16. After considering all relevant facts, 50% of such unverified purchases of Rs. 1,05,90,831/- are allowed i.e. Rs. 52,95,415/-, rest are deleted i.e., Rs. 52,95,415/-." 6. Disenchanted with the relief offered by the Ld. CIT (A), the appellant has come up before this Bench with the present appeal. During the course of hearing, the Ld. A R. had reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it had furnished confirmation letters from the eleven parties. According to the AO, out of 11 parties based in Surat, seven parties were examined on oath and they have produced the requisite details except for their purchases and sales registers claiming that all those bills were below Rs. 20000/-, but, no registers were maintained. It was the case of the AO that there was immediate cash withdrawals after the payments were made to them and all of them confirmed the fact that there was no sale to the appellant and they have only charged commission at Rs. 300/- per Rs. 1 lakh of bill amount. This accusation of the AO has been hotly contested by the appellant that those persons used to buy goods in a very small quantity from various persons with a condition that the payment of purchasers will be given only after the payments being received. Hence, they are bound to withdraw the cash immediately after the payments are being received so that they can make payment for their purchases. So the withdrawals of cash by the persons from whom goods have been purchased do not prove that the payments have come back to the assessee and, hence, it is of no use. The assessee has nothing to do with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings, the Hon'ble Bench had observed thus - "9.2............................................................................................................... ................................................................................................... Therefore, we are of the opinion that there is no justification for such addition. Addition, in such case can be made only in the circumstances and for the reasons stated as under: First of all, we are of the opinion that once it is found that the assessee has duly recorded the alleged purchases (quantity as well as the value) in its books of account and the payment has gone out of books of account, then there is no question of assuming the payment of purchase price as having been made from undisclosed sources and consequently there cannot be any addition on account of undisclosed investment in such purchases. (a) if the aforesaid fact is coming out from the books of account, the addition, if any, can be made only on account of following two counts: (i) if it is established that sale of goods so purchased (if sold) is not accounted for in the books of account; or (ii) the goods so purchased are not accounted for in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is so because Revenue has not doubted the genuineness of the sales rather has accepted the same, there is no allegation of suppression of value of closing stock or of the sales quantitywise or value-wise and there is no allegation of inflation of purchases also. In view of these facts, we are of the opinion that there could not be any addition on any account. Consequently, even the addition sustained by the CIT (Appeals) on the basis of peak of purchases, in our opinion, is not sustainable and we delete the same." II. The Hon'ble jurisdictional High Court [Tax Appeal No.1344 of 2008 with Tax Appeal No.1355 of 2008 dated: 9.2.2010] in the case of ITO, W 6-4 v. Totaram B Sharma, Proprietor of Super Therm dealt with one of the queries of the Revenue as to Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in deleting the addition made by the assessing officer under section 69C of the Income-tax Act on account of unexplained investment to the tune of Rs. 32,67,978? After due consideration of the facts on the issue and also taking into cognizance of the Revenue's contentions recorded therein, the Hon'ble Division Bench had o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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