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M/s Rich and Royal, C/o N.A. Kulkarni, Wadal Versus DCIT Circle-3, Kalyan (W) and ACIT Circle-3, Kalyan (W) Versus M/s Rich and Royal

2016 (7) TMI 1237 - ITAT MUMBAI

Addition of bogus purchases - Held that:- AO and CIT(A) not referred in their order about the filing of affidavit by the proprietor of M/s Astha Silk Industries & M/s Shree Ram Sales & Synthetics. The assessee has placed on record the ledger account of M/s Manoj Mills, M/s Astha Silk Industries & M/s Shree Ram Sales & Synthetics along with the bills and delivery challans wherein payment made through cheques are duly reflected. The sale of the assessee is not disputed by AO and ld CIT(A). Thus, e .....

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ion made by the AO deserves to be deleted. Hence, this Ground of appeal raised by the assessee is allowed. - ITA No.5297/Mum/2014 - Dated:- 27-7-2016 - SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Assessee : Shri Subodh Ratnaparkhi (AR) For The Revenue : Shri Nitin Waghmode (Sr. DR) ORDER PER PAWAN SINGH, JM: 1. These two cross appeal are filed by assessee and Revenue against the order of CIT(A)-I, Thane dated 27.06.2014 for AY 2005-06. The assessee has rais .....

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n to 25% of ₹ 79,68,784/- made on account of bogus purchases from 03 parties overlooking the fact that the entire purchases were bogus specially when the Ld.CIT(A) has himself held that the genuineness of the purchases has been upheld and that the assessee failed to prove the genuineness of the transactions are nongenuine. 2. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) was justified in overlooking the fact that the assessee failed to prove that the purc .....

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r may be restored. 2. The brief facts of the case are that the assessee-company, who is engaged in the business cloth merchant, filed its return of income for relevant AY on 29.10.2005 declaring total income of ₹ 2,75,830/-. The assessment was completed u/s 143(3) of the Act on 28.02.2007 determining the total income of assessee at ₹ 3,00,920/-. Subsequently, notice u/s 148 dated 23/04/2012 was issued to the assessee and the assessment u/s143(3) rws 147 of the Act was completed deter .....

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viding accommodation bills in view of that assessee s transaction with these parties are shame transaction and profit to that extent is suppressed. The assessee contested the notice and filed reply and submitted that return filed on 29.10.2005 may be treated in reply of the notice u/s 148 of the Act. During reassessment proceeding, the AO noticed that assessee has shown the following purchases from those parties. Sr.No. Name of the party Transaction during the year 1 M/s Manoj Mills ₹ 32,2 .....

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owed and added back to the total income of assessee in assessment order u/s 143(3) r.w.s. 147 of the Act. Aggrieved by the order of AO, the assessee filed the present appeal before the CIT(A). The Ld. CIT(A) after hearing the contention of the assessee restricted the addition to 25% of the aggregate purchase, thus partly allowed the appeal of the assessee its order dated 27.06.2004. Further aggrieved by the order of CIT(A) sustaining the addition to the extent of 25%, of aggregate of impugned pu .....

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the AO, all the parties submitted their reply dated 21.01.2013; the parties also furnished the photocopies of their reply to the assessee. The assessee further filed the photocopies of purchased bills, ledger accounts showing the transaction. The bank statement depicting the payment against the purchases through cross account payee cheque. The AO was relying upon the statement of Shri Rakesh Kumar M. Gupta, Prop. Of M/s Manoj Mills recorded u/s 131 on 23.02.2009 by ITO ward 14(3), Mumbai, wherei .....

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ta through his letter dated 21.01.2013 and further on 11.03.2013. AR of the assessee also drawn our attention on the photocopies of affidavit of Mr. Mohit Rakesh Kumar Gupta Proprietor of M/s Astha Silk Industries and Mrs. Hema Rakesh Kumar Gupta, who is carrying the business in the name of M/s. Shreeram Sales & Synthetics and the copy of their replies filed in response to the notice u/s 133(6) of the Act, and copy ledger account along with purchase invoice and bank statement. AR of assessee .....

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es without any basis and the same are liable to be deleted. AR of the assessee relied upon the various decision of this Tribunal in M/s Neeta Textiles vs. ITO , ITA No. 6138/Mum/13 dt. 27.05.15, M/s Jitendra Harshadkumar Textiles vs. ITO in ITA No. 771/Mum/11 dt. 21.11.12, M/s C. Chotalal & Co. vs. ITO in ITA Nos. 3960 to 3967/Mum/12 dt. 24.09.2013, M/s Permit Textiles vs. ITO in ITA Nos. 3948 to 3953/Mum/12 dt. 01.10.13 & DCIT vs. Smt. Neena M. Lekhi in ITA No. 1608/Mum/13 dt. 14.01.201 .....

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CIT(A) for restricting the addition to 25% may be quashed. 4. We have considered the rival contention of the parties and perused the material available on record. The AO made the re-opening of the assessment after recording the satisfaction. The assessee has not assailed the re-opening before us. While framing the assessment, AO inferred that certain parties were found to be nonegenuine as they were providing only accommodation bills, the AO raised suspicion about the purchases from M/s Manoj Mi .....

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parties should not be treated as nongenuine. The assessee submitted his reply and contended that proprietor of all three concern have filed their reply, wherein they have already stated that the transaction are genuine and further contended that Mr. Rakesh Kumar Gupta has given affidavit that no accommodation bills were provided to the assessee. Rakesh Kumar Gupta further gave in writing that due to his ill health, he is not in a position to travel and attend the proceeding personally and any fu .....

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y for trading purpose and the addition made by AO is beyond the purview of section 37(1) of the Act. Ld. CIT(A) concluded that he has confirmed the identical addition against the assessee in assessee s case for AY 2009-10. The reopening for the year under consideration is primarily based on the assessment order of AY 2009-10 and the facts are identical. Though the CIT(A) concluded that the AO was not justified in making the addition on whole of the amount/non-genuine/bogus purchases and restrict .....

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hase of goods were again received in cash by assessee. The statements of Bank accounts of parties were not examined. Section 69C provides that if the explanation offered by the assessee about the source of expenditure is not found satisfactory by the AO, the amount may be added to his income. The AO has not recorded the satisfaction that the purchases made by assessee are not genuine. The AO merely relied upon the statement of Mr. Rakesh Kumar Gupta. Mr. Rakesh Kumar Gupta has not referred the n .....

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Textiles vs. ITO (supra) held as under:- 7. We have perused the assessment order and the order of CIT(A). We have also perused the order of the Tribunal Mumbai "I" Bench in the case of M/s. Jeetendra Harshadkumar Textiles in ITA No.771 and 2211/Mum/2011 for assessment year 2007- 08 dated 21/11/2012. We find force in the contentions of the counsel that the facts and circumstances are identical though the figures may differ. The Tribunal had given its finding at para-8 on page-5 of its o .....

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dra Harshad Kumar Textile Pvt. Ltd. for A.Y.2002-03 & 2007-08. As you are aware that my assessing officer had recorded alleged statement u/s. 133A and 131 of the I.T.Act. 1961 1 have been receiving witness summons from all four corners of the city on the ground that I have given accommodation bill, though I have denied the content of the statements recorded by A.O. u/s. 133A & 131 vide my letter dated 27.4.2009 and my affidavit dated 20.2.2009 submitted to ward 14(3)(2). It is physically .....

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of the said ledger account is already submitted the department." 8.1 From the above letter it is clear that the same was written in response to notice issued by the AO. Not only Shri Rakesh Kumar Gupta has stated that he has retracted from the statement recorded during the survey but also filed an affidavit dated 20/2/2009 and letter dated 27/4/2009 to deny the statement made during the survey under section 133A. He has further confirmed that the sales made by the assessee were effected an .....

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any, made in the case of the assessee will be based on presumption only and it cannot be sustained in the eyes of law. As against that assessee has submitted various evidences to show that the actual delivery of the goods was received by the assessee from the said party which has not been discarded by the AO. The addition sustained by Ld. CIT(A) is also on presumption basis. Therefore, keeping in view the facts and circumstances of the case, we are of the opinion that additions made by the AO d .....

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l the appeals filed by the Assessee are partly allowed and all the appeals filed by the Revenue are accordingly dismissed. As we have seen that the Co-ordinate Bench of this Tribunal in the cases referred above has categorically noted that Mr. Rakesh Kumar Gupta when confronted with his statement has categorically rebutted his statement in course of cross-examination (though not appeared in the present case). And the Co-ordinate Bench of this Tribunal in all cases deleted the addition which was .....

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