TMI Blog2017 (7) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... profit made on account of the purchase and sale transaction attributed to the purchases held bogus Alternatively the assessee stated that the addition made on account of inflated profits had only increased the profit of the business of the assessee and there was no reason or evidence with the AO to hold that the same was on account of income from other sources. Ld.Counsel for the assessee stated that the CBDT had issued a circular No.37/2016 dated 2nd Nov, 2016 wherein it had directed that additions made on account of disallowances made, which resulted in enhancement of profits of assessees eligible to deduction under chapter VIA, should not be denied deduction of the enhanced profits. Thus on all aspects of the addition made the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-12 -2015, in pursuance to a Miscellaneous Application filed by the assessee. 2. The assessee has raised the following revised grounds of appeal before us : 1. The learned CIT(A) has erred in confirming the total addition of ₹ 71,77,603/- made by the AO vide its order u/s 143(3) dated 11/02/2013. 2. The learned CIT(A) has erred in confirming the addition of ₹ 59,56,645/- by treating the cash purchases as bogus and not granting any deduction u/s 80 1C on the same. 3. The learned CIT(A) has erred in confirming the AO's addition of ₹ 12,20,958/- by treating 25% of the total purchases from 3 parties namely i) m/s Gurcharan Banga Fruit Co., of ₹ 58,13,166/- ii) Shri Gurmeet Singh of ₹ 40,84, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s B.K.Fruit Co. Rs.1,86,50,187/- Total Rs.2,85,47,582/-. 25% of the above purchases treated as bogus ₹ 71, 36, 896/ 4. The Assessing Officer, thereafter, calculated the sales attributable to the aforestated bogus purchases by applying the ratio of raw material consumed to the sales made by the assessee. He then worked out the profits on the sales attributable to the bogus purchases made by the assessee by applying the net profit rate shown by the assessee of 14.61% to the sales, and calculated the same at ₹ 59,56,645 on the cash purchases and ₹ 12,20,958/- on account of the three parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the parties had responded and filed confirmations in response to letters issued under section 133 (6).The assessee further submitted that the entire addition had been made only on the basis of surmises and conjectures. He further submitted that the AO had not come across any discrepancy related to the sales and therefore could not have treated a part of sale as bogus merely on account of treatment of purchases as bogus. The CIT(A), after considering the assessees submissions, upheld the disallowance made, for the reason that the assessee had failed to file any evidence in support of the purchases made. The CIT(A)held at paragraph 6 of her order as follows: 6. I have gone through the facts of the case, appellant's submissions, cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the enhanced profits. The entire submissions of the assessee are reproduced at para 4 of the order. We find that for the disallowance made on account of cash purchases made by the assessee the assessee had submitted that it was an Agro-based industry involved in the business of preserving and processing fruits and vegetables and that it qualified for deduction under section 80 IC of the Income Tax Act, 1961, which had been allowed to it from assessment year 07-08 onwards. The assessee further submitted that it made purchases both from agents/producers- farmers and that small purchases were made from farmers who were paid in cash while purchases made from established traders were either made by cheques or bank transfers. The assessee furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO had confused the copy of inward entry Challan of receipts of Goods with bills/vouchers of purchases and had therefore proceeded on incorrect premises to draw a wrong conclusion. He drew our attention to the challans placed at PB-89-95. 10. Ld. Counsel for the assessee also stated that the AO had not doubted the sales by made by the assessee and therefore there was no reason at all to disallow the profit made on account of the purchase and sale transaction attributed to the purchases held bogus 11. Alternatively Ld. Counsel for the assessee stated that the addition made on account of inflated profits had only increased the profit of the business of the assessee and there was no reason or evidence with the AO to hold that the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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