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2017 (7) TMI 566 - ITAT CHANDIGARH

2017 (7) TMI 566 - ITAT CHANDIGARH - Tmi - Deduction u/s 80IC - disallowance made on account of cash purchases as bogus - Held that:- As for the parties from whom purchases made were held to be bogus since confirmations of their balances was not received the AO, the assessee stated that all bills and vouchers of purchases had been produced before the Assessing Officer time and again and had been examined by the AO also. The Ld. counsel for the assessee further stated that all payments were made .....

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d 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 assessee had filed detailed submissions and evidences. A .....

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der the issue afresh and pass a speaking order in the light of submissions and evidences filed by the assessee and also after taking into consideration the CBDT circular No.37/2016 dated 2nd Nov, 2016 referred to by the assessee in this regard - Grounds raised by the assessee allowed for statistical purposes. - ITA No.957/Chd/2014 - Dated:- 17-11-2016 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : Shri Rajiv Sahai, ITP For The Respondent : M .....

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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 .....

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he deduction u/s 80IC of the Act on the addition/ disallowances made. 5. The appellant craves the indulgence to modify, alter, add, delete any one or more GOAs. 3. Brief facts relating to the case is that return declaring income of ₹ 45,769/-was filed by the assessee on 13.10.2010, after claiming hundred percent deduction of profits under section 80 IC amounting to ₹ 1,85,29,002/. Assessment under section 143(3) was framed, treating the cash purchases made by the assessee to the tune .....

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ngh Rs.40,84,229/- 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 .....

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ging the additions made. The main thrust of the arguments made before the CIT(A), was that the books of accounts having been examined by the AO and no discrepancy having been pointed out in the same, the AO could not have treated the purchases made in cash as bogus more specifically in view of the fact that the assessee is an Agro-based Industrial unit in Himachal Pradesh indulging in the activity of preserving and processing fruits and vegetables and during the course of carrying on its activit .....

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refore held that there was no reason to treat the impugned purchases as bogus more particularly in view of the fact that the rest of 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 bog .....

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ash purchases were made and no bills were produced in support of its claim that the cash purchases were genuine. At appellate stage assessee's main contention is assessee has made payments by RTGS to some parties. However, mere payments does not substantiates the nature of transaction. Thus in absence of any evidence in support of the fact that purchases were made for the industrial undertaking action of AO is upheld and the appeal of assessee is dismissed. 6. Aggrieved by the same the asses .....

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ntentions and perused the orders of the authorities below as also the documents placed before. We find that before the CIT(A), the assessee had made detailed submissions, supported by evidences, in support of its contentions that the impugned purchases were not bogus and that in any case deduction under section 80 IC should not have been denied to the assessee on the enhanced profits. The entire submissions of the assessee are reproduced at para 4 of the order. We find that for the disallowance .....

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sh while purchases made from established traders were either made by cheques or bank transfers. The assessee further submitted that bills were not usually raised by the small agriculturists since they did not have any bill books and since their products were not taxable under VAT/CST. Having described the nature of the business and the manner of carrying out the business, the assessee further stated that the AO had conducted detailed hearings in the present case and listed the various date of he .....

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ases had been produced before the Assessing Officer time and again and had been examined by the AO also. The Ld. counsel for the assessee further stated that all payments were made to them by cheques or by bank transfers. The Ld. counsel drew our attention to the copy of purchase account placed at paper book page number 96-191 and copy of account of Gurcharan Banga Fruit Co. placed at PB-39-46, Gurpreet Singh, placed at PB-47 and B.K. Fruit Co. palced at PB 27-34 confirming the same. As for the .....

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