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M/s. Raj Exports, Versus Assistant Commissioner of Income Tax, Circle-6, Surat. (Vice Versa)

2011 (11) TMI 760 - ITAT AHMEDABAD

Penal proceedings u/s 271(1)(c) - Held that:- There can be no addition on any account and, consequently, the stand of the Ld. CIT (A) in sustaining 50% of ₹ 1.05 crores requires to be deleted. It is ordered accordingly. - In a nut-shell, the addition of ₹ 1.05 crores made by the AO u/s 69C of the Act is deleted. The other grievance of the appellant being that the Ld. CIT (A) had erred in not allowing consequential higher deduction u/s 80HHC of the Act. Penalty deleted. - I.T.A. N .....

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r the assessment year 2002-03. I. ITA NO.1827/2005 - By the appellant firm: 2. The appellant firm in its grounds of appeal had raised nine grounds, in which, ground No.1 being general and no specific issue involved, it does not survive for adjudication. Levy of interest u/s 234A, 234B and 234C in ground No.8, is mandatory and consequential in nature and, thus, this ground is not maintainable. Challenging the initiation of penal proceedings u/s 271(1)(c) of the Act in ground No.9 is also not main .....

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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 ₹ 52.95 out of ₹ 1.05 crores made by the AO on account of bogus purchases u/s 69 .....

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of income, admitting a total income of ₹ 10.97 lakhs by claiming deduction of ₹ 25.3 lakhs u/s 80HHC of the Act. During the course of assessment proceedings, it was noticed by the AO that the appellant had shown purchases of diamonds to the tune of ₹ 1.54 crores from 12 parties. To verify the veracity of the purchases and outstanding credit balances, the AO procured the presence of the said parties by issuance of summons u/s 131 of the Act and recorded their statements. For the .....

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count, the same was treated as an unexplained expenditure. While making such an addition, the appellant was given the benefit of telescoping for the outstanding balances in respect of the said parties. 5. Aggrieved, the appellant took up the issue with the CIT (A) for solace. After taking into account the contentions of the appellant coupled with various case laws in its favour and the version of the assessing officer, the Ld. CIT (A) had observed thus:- 2.12. However, it is also a fact that exp .....

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s to make statements and it is also seen that both the AO and the Addl. CIT gave sufficient opportunity to the assessee 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 produ .....

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of such unverified purchases of ₹ 1,05,90,831/- are allowed i.e. ₹ 52,95,415/-, rest are deleted i.e., ₹ 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 more or less what was portrayed before the first appellate authority. In furtherance, it was submitted that - the Ld. CIT (A) had erred in law and on facts in not appreciating t .....

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en his arguments, the Ld. A R had furnished a voluminous paper book containing 1 - 179 pages which consist, inter alia, copies of (i) correspondences with the authorities; (ii) statements by the suppliers; (iii) purchase bills against which payments were made through banks; (iv) affidavits of the suppliers etc., 6.2. On the other hand, the Ld. D R was specific in his endeavour that the AO had, in fact, analyzed the issue in great deal backed with various judicial precedents. However, the Ld. D.R .....

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; that the CIT (A) had not considered the material evidence brought on record by the AO; and that she ought to have upheld the order of the AO in toto. 6.2.1. It was, therefore, vociferously pleaded that the impugned order of the Ld. CIT (A) requires to be annulled and that of the AO s order be sustained. 7. We have attentively considered the rival submissions, meticulously perused the relevant records and also the documentary evidences adduced by the Ld. A R in the shape of a paper book and als .....

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below ₹ 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 ₹ 300/- per ₹ 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 tha .....

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ow the funds of its payments were being used by the parties. It was, further, contended that all the requisite details have been submitted to the AO who had accepted that the appellant maintained quantity-wise details in respect of materials purchased and exported. Inventory details of closing stock furnished were also not in dispute. 7.2. The Ld. CIT (A) had also in her impugned order fairly conceded that; 2.12. However, it is also a fact that exports have taken place i.e., sales are realized a .....

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ffirmations made in the affidavits which were executed before none other than an Executive Magistrate cannot be termed as a self-serving document and that it has no evidentiary value. The sanctity of an affidavit cannot be undermined so lightly. Once the affidavits of the parties have been placed at the doorstep of the Revenue, the onus had fairly lies with the Revenue to expose the genuineness or otherwise of the contents of such affidavits. However, there was no trace in the impugned order of .....

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restrict the addition of ₹ 32.67 lakhs on account of bogus purchases made u/s 69 of the Act to the peak of disputed transactions worked out at a sum of ₹ 5.05 lakhs? 7.3.1. After due consideration of the contentions of the either parties and also analyzing the issue in depth with illustrations as recorded in its findings, the Hon ble Bench had observed thus - 9.2………………………………………&h .....

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ion 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 additio .....

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ed in the books (if sold) or are found recorded in the closing stock (if not sold), then there cannot be any addition except on the following counts: (a) if there is an allegation of suppression of sale price or suppression of value of closing stock and for that purpose, the onus is on the Revenue to establish that the assessee has either suppressed the sale price or the value of closing stock - either quantum-wise or value-wise, meaning thereby that unless and until any of these two ingredients .....

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ase price is concerned, here again, we are of the opinion that the onus is on the Revenue to establish this fact. (d) Another way of making addition in assessee s hands can be, if Revenue succeeds in establishing that the purchase price paid by the assessee through its books of account has come back to the assessee and here again, we are of the opinion that onus is on the Revenue to establish such a fact. 9.4. Meaning thereby that there cannot be any addition either on account of undisclosed inv .....

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recorded in the books of account, the payment for such purchases has been found to have been made by crossed cheques and duly recorded in the books of account, the sales corresponding to such purchases have been found recorded in the books of account and 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 inflati .....

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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 ₹ 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 observed thus - 10. We have considered made .....

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IT (Appeals) has considered these transactions of purchases which are of small in nature and arrived at peak of ₹ 5,05,800/-. However, the Tribunal has made detailed analysis of the facts and after making certain propositions which are relevant in support of these transactions, the Tribunal has recorded that the purchases made by the assessee from four different parties are duly recorded, payment for such purchases are also found to be recorded and Revenue has not doubted the genuineness o .....

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