TMI Blog2011 (11) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chases must have been made in cash from parties whose details only the assessee is privy too and may as well be unregistered dealers. The AO states that ₹ 1,05,59,154/- represents unexplained expenditure u/s 69C and is this added and deduction u/s 80HHC is also denied to that extent. 2.13. It is difficult to accept appellant s contention that there is (sic) was coercion on part of the assessing officer on the purchase parties 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 However, exports were made, foreign exchange earned and there is no evidence that the money withdrawn by the purchase parties came back to the appellant, quantitative tallies are maintained and there are no defects in books of accounts. 2.15.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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 also various case laws on which the appellant had placed unstinted faith. 7.1. The appellant had claimed that the total purchases were to the tune of ₹ 1.54 crores from the twelve parties and to strengthen its claim, 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 ₹ 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 ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal issue to that of the present appellant had cropped up before the Hon ble A Bench in the case of Shri Tolaram B Sharma v. ITO W-6(4), Surat [in ITA Nos.2239 2291/Ahd/2004 dated: 25.1.2008 AY 2001-02]. The issue before the Hon ble Bench was, in brief, that as to whether the Ld. CIT (A) had erred in directing the AO to 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 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 ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. From the above discussion, we are of the opinion that in a given case, if - until the Revenue establishes such fact by cogent material. 11. Coming to the present case, admittedly, the purchases made by the assessee from the relevant four parties, quantity-wise as well as value-wise have been found to have been 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 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.13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7.5. In a nut-shell, the addition of ₹ 1.05 crores made by the AO u/s 69C of the Act is deleted. 8. 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. 8.1 However, at the glance of the grounds of appeal raised before the first appellate authority, it was noticed that no such a claim was put forth before the CIT (A) for remedy. We, therefore, find no infirmity in the impugned order of the Ld. CIT (A) so far as this issue is concerned. However, the appellant will be at liberty to approach the AO for redress. ITA NO.1954/2005 By the Revenue: 9. The lone grievance of the Revenue that the Ld. CIT (A) had erred in deleting the addition of ₹ 52.95 lakhs out of the total addition of ₹ 1.05 crores becomes redundant since this Bench has taken a view in the appellant s appeal in para No.7.4 above that the addition of ₹ 1.05 crores made by the AO u/s 69C of the Act requires to be deleted. In the result: (i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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