TMI Blog2016 (11) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... which the expenditure pertains - Held that:- Confirmation from TCI clearly shows that this expenditure pertains to F.Y. 2008-09. Also the agreement which states that this commission pertains to a period of 15 months has not been signed by the assessee. In view of the above discussion, it is held that this expenditure pertains to the previous year under consideration and disallowance of prepaid expenses of ₹ 15,00,000/- is directed to be deleted - ITA No. 414/JP/15 & CO No.35/JP/15 - - - Dated:- 30-9-2016 - Shri Kul Bharat, JM And Shri Vikram Singh Yadav, AM Assessee by : Shri H.M. Singhvi ( CA ) Revenue by :Shri O.P. Bateja ( Addl. CIT ) ORDER Per Shri Vikram Singh Yadav, A. M. This is an appeal filed by the Revenue and the assessee s cross objection against the order of CIT(A)-2, Jaipur on 06.02.2015 wherein the following grounds of appeal have been taken: In ITA No. 414/JP/15 (1) Whether on the facts and in the circumstances of the case and in law the ld. CITA) erred in restricting the trading addition to ₹ 13,19,803/- as against ₹ 21,99,672/, made by the AO by disallowing 25% of the total purchases of ₹ 87,98,686/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SnehaImpex 10,80,000/- 10. Unique export 19,27,243/- Total 87,98,686/- The AO drawn reference to the decision of Hon ble Gujarat High court in the case of Sanjay oil cake Industries vs. CIT report in (2008) 10 DTR Guj. 153 wherein it was held that the appellate authorities were justified in upholding the disallowance of payment made towards bogus purchases, the decision in case of M/s Vijay Proteins Ld. vs.ACIT 58 ITD 428 wherein the ITAT Ahmedabad has held that 25% of bogus purchases should be disallowed and the decision of the ITAT Jaipur Bench in the case of BCIT, Circle-1, vs. M/s Nand Kishore Meghraj Jewellers, A.Y. 2006-07 in ITA No.433/JP/2009 dated 19,09,2009 where it was held that where none of the bogus purchases have been got verified and therefore, the purchases remain unverified which is a defect in the books of accounts and the provisions of section 145(3) of the IT Act, 1961 are applicable. Following the above said decisions, the AO rejected the books of accounts and estimated the profit of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the ld. CIT(A). On investigation, it is found that four parties were also indulged in providing accommodation bills. The sufficient opportunities have been given by the AO to prove the genuineness of the purchase. The AO himself issued the notices to these parties but notices were returned back by the postal department with remark no such party exist at given address. The assessee could not produce these parties for verification during the course of assessment proceedings. Even the AO provided sufficient time to the assessee. The unverifiable purchases were ₹ 3,28,40,664/- whereas the assessee exported the goods during the year at ₹ 93,42,720/- during the year under consideration . Therefore the assessee s claim that all the goods were exported the goods during the year at ₹ 93,42,720/- during the year under consideration. Therefore the assessee s claim that all the goods were exported during the year is not correct. Further the ld. AO had not precluded by the law if the assessee even exported the goods 100% to investigate the unverifiable purchases. The ld. AO sent noticed to these parties which were returned back unserved with remark party 9is not existent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. During the course of hearing, the ld AR submitted that in the enquiry letter in point No.8, the AO asked the assessee to file details of purchases over 1 la c from a single party giving RST/CST No./PAN Nos., Items purchased and total amount of purchases made during the year. All these details were filed vide letter date 03.10.2011. On page No.2 in para 3, the AO observed that Moreover it was seen that the assessee had made purchase from some parties which were related to the information recorded from BCIT and investigation wing. Seventy surveys/enquiries were conducted in the month of March 2008. In these enquiries it was noticed that these were issuing bogus bills. During the course of assessment proceedings from the information received as a result of these inquiries it as noticed that concerns from which assessee has shown purchases are bogus entry providers. The AO had not passed on such material to the assessee for cross examination. The assessee vide letter dated 30.11.2011 filed the information and explanation as noted in the proceeding sheets with copies of PAN cards of Prop. of Abhishek Enterprises Unique Exports and confirmations of Naman Gems, Sagar Exports, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of profits. Since in the assesse s own cases ITAT Jaipur Bench in 2005-06 2007-08 wherein similar facts existed, held and sustained the adhoc addition sustained by CIT(A). It is therefore prayed that the rate of 15% applied on unverified purchases be deleted and a marginal addition to cover up the amount inflated @ 0.20 paise to 0.25 paise per ₹ 100/- for issuing the bills be sustained. 4. We have heard the rival submissions and pursued the material available on record. Undisputedly, the books of accounts have been rejected on account of certain purchases which remain unverified during the course of assessment proceedings. The rejection of books of accounts is therefore not under challenge before us. The AO has taken the necessary steps in terms of verifying these purchase transactions by issuing the summons u/s 131 and the assessee was allowed an opportunity to produce these parties for verification. However, besides sharing the PAN numbers and some confirmations, the purchases remain unverifiable. Only limited issue before us therefore relates to estimation of purchases which can be disallowed by the AO. The AO has estimated 25% of purchases whereas the ld CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this previous year only appears to be correct because it would have been beneficial to the assessee to claim this amount in A.Y. 2008-09 because in that year its returned income was ₹ 5,83,030/- whereas in the current assessment year it has shown a returned loss. Moreover the confirmation TCI clearly shows that this expenditure pertains to F.Y. 2008-09. Also the agreement which states that this commission pertains to a period of 15 months has not been signed by the assessee. In view of the above discussion, it is held that this expenditure pertains to the previous year under consideration and disallowance of prepaid expenses of ₹ 15,00,000/- is directed to be deleted. This ground is allowed. 6. We have heard the rival submissions and pursued the material on record. The above findings of the ld CIT(A) remain uncontroverted before us. In any case, there is no loss to the revenue as the tax rates remain the same in both the years. We accordingly confirm the finding of the ld.CIT(A). The ground taken by the Revenue is accordingly dismissed. In the result the appeal filed by the Revenue and cross objection by the assessee is dismissed. Order pronounced in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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