TMI Blog2018 (2) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... with her order. Confirming the same, we decide first ground of appeal against the AO. Addition on account of commission expenses - Held that:- FAA had rightly held that no ad hoc disallowance can be made without relying upon any cogent material. Confirming her order, we dismiss second ground, raised by the AO. Disallowance u/s 14A - time limit for issue of notice under section 143(2) - Held that:- The original return for the year under consideration was filed on 30/09/2009, the time limit for issue of notice under section 143 (2) was six months from the end of the financial year in which the return was filed, that the search took place on 29/04/2011, that time limit for issue of notice at expired on the date of initial of search, that the assessment for the year under appeal could not be said to be pending or abated, that the impugned order did not reflect that any material emanating from the search led to the disallowance, made by the AO, under section 14A. See All Cargo Global Logistics Ltd [2017 (6) TMI 309 - BOMBAY HIGH COURT] - Decided in favour of assessee. - I.T.A./6385/Mum/2016 - - - Dated:- 7-2-2018 - Sh. Rajendra, Accountant Member And C. N. Prasad, Judicial Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 1. 70 crore to the total income of the assessee, while completing the assessment. 2.1. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA) and made elaborate submissions and relied upon several case laws. After considering assessment order and the submissions of the assessee, she held that the sales tax Department had put of lists of parties who were found to be engaged in issuing bogus bills without actual sale of goods, that the tribunal and the honorable High Court said dealt with the issue of bogus purchases and the consequential effect thereof. The FAA recorded the various theories propounded by the judicial forums and referred to the cases of Nikunj Eximp Enterprises Private Limited(IT Appeal No. 5604 of 2010 dtd. 17. 12. 2012), Babulal C Borana, M K Brothers(163 ITR 249), Bholanath Poly Fab (355 ITR 290), Simit P Sheth(356 ITR 451) and Rajeev G Kalathil(51taxmann. com 514). She further held that the AO had accepted the sales made by the assessee, that purchase sale correlation had not been controverted by the AO, that no discrepancy in the stock was pointed out, that the payments made for the purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddresses were incomplete. The inspector deputed by the Income-tax Department also could not find any of the parties available at the given addresses. The assessee was unable to produce any confirmation from any of the parties. Though the assessee had claimed to have made payment by account payee cheques, upon verification, it was found that the cheques were encashed by some other parties and not by the supposed sellers. However, the Tribunal was of the opinion that though the purchases might have been made from bogus parties, the purchases themselves were not bogus. The Tribunal adverted to the facts and data on record and came to the conclusion that the entire quantity of opening stock, purchases and the quantity manufactured during the year 2005-06 were sold by the assessee. Therefore, the purchases of the entire 1, 02, 514 metres of cloth were sold during the year 2005-06. The Tribunal, therefore, accepted the assessee s contention that the finished goods were purchased by the assessee, though not from the parties shown in the accounts, but from other sources. The Tribunal was of the opinion that not the entire amount, but the profit margin embedded in such amount would be subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit out of purchases made through non-genuine parties. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick could be adopted. In the case before us, the assessee is not a wholesale trader of steel, but is a manufacturer of steel items. It had purchased and used steel from the parties, who have not issued bills. In other words, PKS and others from whom the assessee has claimed to have purchased steel, had not supplied goods to it. But consumption of steel has not been questioned-rather sales have been accepted as it is. Unlike the matter of Bholanath Poly Fab(supar)it is not a case where the cheque issued by the assessee have been encashed by unknown persons. At least the AO has not alleged that. Considering the above, it can safely be said that it is a case of purchases made from non - genuine parties and not a case of bogus purchases. The FAA had adopted a formula to determine possible profit out of purchases made from unknown suppliers. In our opinion, there is no legal or factual infirmity in her order. No hard and fast rules can be applied in such cases. The rate of profit would vary from business to business a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom which did not form part of total income). 4.1. The assessee challenged the order of the AO before the FAA. Before us, it was stated that additions which did not relate to incriminating material yielded by the search could not be made, while completing the assessment under section 153A in non-abated assessment, that the disallowance made by the AO under section14A was not based on any such seized the material. The FAA referred to the case of All Cargo Global Logistics Ltd. (18 ITR-Trib-106) and observed that order of the tribunal was upheld by the honorable Bombay High Court, that the original return for the year under consideration was filed on 30/09/2009, the time limit for issue of notice under section 143 (2) was six months from the end of the financial year in which the return was filed, that the search took place on 29/04/2011, that time limit for issue of notice at expired on the date of initial of search, that the assessment for the year under appeal could not be said to be pending or abated, that the impugned order did not reflect that any material emanating from the search led to the disallowance, made by the AO, under section 14A of the Act. Following the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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