TMI Blog2019 (8) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... s in possession of primary purchase documents and the payments were through banking channels. The books of accounts were audited and the assessee maintained quantitative details of the items being dealt with by him. The sales turnover reflected by the assessee was not disturbed by the revenue. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which lower authorities has rightly done so. However, keeping in view the fact that the assessee was a trader and dealing in low-margin item like metal, which bears a lower VAT rate and also in view of the fact that the assessee had already reflected Gross Profit Rate of more than 4%, the estimation of 12.5% was on the higher side. We estimate the same @2% of alleged bogus purchases - The balance additions stand deleted. Rejection of books of accounts would require no adjudication in view of the fact that Ld. AO has not disturbed any of the financial parameters except to the extent of making addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. (b) There is no new tangible material in possession of the Assessing Officer which justify issuance of notice u/s 148 of the Act (c) The initiation of proceeding under section 147 of the Act and issuance of notice under section 148 is bad in law and contrary to the provisions of the Act and liable to be cancelled / annulled 4. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming order made under section 143(3) rws 147 of the Act by the learned Assessing Officer which is illegal, bad-in-law, ultra vires and without allowing reasonable opportunity of the hearing, without appreciating the facts, submission and evidences in their proper perspective, without providing copies of material used against the appellant and without providing cross examination of parties whose statement are relied upon is liable to be annulled. 5. The learned assessing officer erred in charging interest under section 234A, 234B, 234C and 234D of the Act. 1.3 Facts in brief are that the assessee being resident individual stated to be engaged in the business of trading in ferrous / no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serably failed to lead evidences to substantiate the purchase transactions and therefore, the addition made by Ld. AO was to be confirmed. Aggrieved, the assessee is in further appeal before us. 3. The Ld. Authorized Representative for Assessee [AR], drawing our attention to the documents placed in the paper-book, assailed the additions made by lower authorities. Reliance has been placed on the decision of Hon ble Supreme Court in Dhakeshwari Cotton Mills Ltd. V/s CIT [26 ITR 775] to submit that the adverse material relied upon by Ld. AO to make the additions was not confronted to the assessee. Reliance has been placed on the decision of Hon ble Bombay High Court in Pr.CIT V/s M/s Uni Packs Ltd. [ITA No.194 of 2017 dated 30/04/2019] for the submissions that no independent inquiries were made by Ld. AO and therefore, the additions were not sustainable. Reliance has been placed on the decision of Hon ble Gujarat High Court in Pr.CIT V/s Tejua Rohit Kumar Kapadia [ITA No.691 of 2017] for the submissions that in the absence of any evidence of recycling of cash back to the assessee, the additions would not be justified. Reliance has also been placed on various decisions to sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which lower authorities has rightly done so. However, keeping in view the fact that the assessee was a trader and dealing in low-margin item like metal, which bears a lower VAT rate and also in view of the fact that the assessee had already reflected Gross Profit Rate of more than 4%, the estimation of 12.5% was on the higher side. We estimate the same @2% of alleged bogus purchases. The same works out to be ₹ 13,35,903/-. The balance additions stand deleted. The decision of lower authorities stands modified to that extent. 6. Our aforesaid view is in line with the recent decision of Hon ble Bombay High Court rendered in bunch of appeals titled as Pr.CIT Vs. M/s Mohommad Haji Adam Co. [ITA No.1004 others of 2016, dated 11/02/2019] wherein Hon ble Court distinguishing the cited case law of Hon ble Gujarat High Court rendered in N.K. Industries Ltd. Vs Dy. C.I.T. in Tax Appeal No. 240 of 2003 and connected appeals decided on 20th June, 2016 observed as under: - 8. In the present case, as noted above, the assessee was a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
