TMI Blog2014 (2) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... his would substantially eliminate the angle of the purchase price being artificially inflated. Additionally, the Tribunal also noted other parameters such as higher net and gross profit rates of the present year compared to the earlier years of the recent past - no question of law arises Purchases from an unregistered dealer M/s. Amber Trading Company - A.O of the firm M/s. Amber Trading Company treated the URD purchases of M/s. Amber Trading Company as genuine. Once, the URD purchases of M/s. Amber Trading Company is accepted as genuine by the A.O of that party, the disallowance made by the A.O in this regard cannot be sustained because it has no legs to stand. Accordingly, we decide this aspect of the matter in favour of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties ? (C) Whether the Appellate Tribunal has substantially erred in holding that because the Assessing Officer of the supplier company treated the URD purchases as genuine, the consequential sales made by Amber Trading Company to the assessee is also genuine ? (D) Whether the Appellate Tribunal has substantially erred in upholding the decision of the CIT [A] in deleting the addition of ₹ 21,19,45,382/- made by the Assessing Officer treating the purchases from Amber Trading Company to that extent as bogus and non-genuine ? (E) Whether the Appellate Tribunal has substantially erred in upholding the order of the CIT (A) in deleting the addition of ₹ 1,33,42,544/- made on account of disallowance of speculation loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer to 5% of the total bogus purchases of ₹ 61,67,077/- made from M/s. Vishal Traders ? (B) Whether the Appellate Tribunal has substantially erred in holding that provisions of Section 40A (3) of the Act are not attracted to the cash purchases of ₹ 61,67,077/- claimed to have been made from other parties ? ' 4. Issue pertains to addition of ₹ 61.67 lakhs [rounded off] made by the Assessing Officer in case of the respondent-assessee for the A.Y 2007-08. The respondent-assessee is in the business of manufacturing and exports of de-oiled cake, starch, glucose and cotton yarn. For the year under consideration, the Assessing Officer examined various purchases made by the assessee for the purpose of productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was of the opinion that the purchases were not bogus. He, however, taxed 25% of the amount relying on the decision of this Court in case of Sanjay Oilcake Industries v. CIT [2009] 316 ITR 274 (Guj.). 8. Revenue as well as assessee both carried this issue in appeal before the Tribunal. Revenue urged that the entire purchases were bogus and therefore Assessing Officer's order adding the entire amount to the income of the assessee should be restored. Assessee contended that the purchases were genuine and the payments were made through cheques, no disallowance therefore should be made at all. 9. The Tribunal in the impugned judgment noted that the GP rate and the net profit rate of the year under consideration were better than the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different fact situation. In the said case, the assessee had made purchases but the parties were not traceable. They had opened the bank accounts and immediately upon credit of the cheques, withdrawn the amount by bearer cheques. On such basis, the Tribunal had held that such parties were creation of the assessee itself for the purpose of banking purchases into books of account because the purchases with bills were not feasible. The Tribunal therefore, observed that such parties became conduit pipes between the assessee-firm and the sellers of the raw materials. It was on this basis that 25% of the purchase price was added by way of income of the assessee observing that possibility of inflating the price of the raw material cannot be ruled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Amber Trading Company itself, such purchases were accepted and found genuine. That being the situation, the Tribunal in our opinion correctly did not accept the Revenue's appeal, making following observations :- 3.9 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that the disallowance in respect of purchases from Amber Trading Company was made by the Assessing Officer on this basis that out of total purchases claimed by the assessee from Amber Trading Company of ₹ 4123.10 lacs, total un-registered dealers [URD] purchases made by Amber Trading Company in assessment year 2008-09 is ₹ 2119.45 lacs. The A.O was of the view that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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