TMI Blog2020 (3) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed amount of profit is warranted since it is not the case that AO/Ld. CIT(A) could unearth any hidden profit which was discovered as investments/cash/bullion etc. so in the aforesaid facts and circumstances, the addition made is deleted. - Decided in favour of assessee - I.T.A. No. 2474/Kol/2019 (Assessment Year: 2011-12) - - - Dated:- 5-2-2020 - Shri J. Sudhakar Reddy, AM And Shri A. T. Varkey, JM For the Appellant Shri K. M. Roy, FCA For the Respondent Shri Supriyo Pal, JCIT, Sr. DR ORDER Per Shri A.T. Varkey, JM This is an appeal filed by the assessee against the order of Ld. CIT(A)-14, Kolkata dated 25.09.2019 for AY 2011-12. 2. Though ground no.1 of appeal of the assessee is a legal issue, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor. According to the AO, a verification of beneficiaries list disclosed that M/s. M. Dhara Brothers is beneficiary of Shri Sanjiw Kumar Singh and during the assessment year 2011-12 the assessee firm had made transaction totaling ₹ 58,42,234/- with the sham concerns of Shri Sanjiw Kumar Singh. Thereafter, the AO had reopened the assessment after issuing notice u/s. 148 of the Act. During the reassessment proceeding, the AO noticed that on 27.11.2018 the Ld. AR of the assessee firm filed petition enclosing copy of the declaration u/s. 183 of the Finance Act, 2016 in respect of IDS 2016 on behalf of the assessee before the DCIT, Circle-48 and ACIT, Circle-48, Kolkata for seeking direction u/s. 144A of the Act. According to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery, mode of delivery, inward transportation of goods in its godown/show room etc. the assessee failed to produce any documents as called for, he added the entire purchase amount (₹ 58,42,234/-) minus ₹ 2,33,690/- (declared by assessee IDS as undisclosed income) i.e. ₹ 56,08,544/-. Aggrieved assessee preferred an appeal before the Ld. CIT(A) who gave partial relief to the assessee by restricting the addition to GP of 26.88% at ₹ 15,07,579/- by observing as under: Therefore, after considering the factual matrix of the case, it appears that the AO in the assessment order had treated the entire alleged purchase as bogus but has not rejected the books of account which is essentially means that he has accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocured are treated as bogus it does not necessarily mean that the entire amount should be disallowed since the assessee s explanation was that assessee a contractor of supply of pipes and laying/installation of pipe line for the Govt. of West Bengal (Public Health Engineering Deptt.)(PHED) had procured the goods/pipes from the grey market and had supplied it to the government which goes through the watchful eyes of engineers who has to certify about the quantity and quality of supplies, and then only the assessee gets the payment and moreover according to him, it is common knowledge that the installation/laying of pipe lines can be completed only by laying pipes. So, the question of raising only the bogus bills without supply of pipes in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which he in turn duly offered for transaction in the IDS scheme of 2016 which has been accepted by the Ld. Pr. CIT-16. However, the AO brushed aside the explanation of the assessee and made addition of the entire amount [minus the amount of IDS] which comes to [₹ 58,48,234/- - ₹ 2,33,690/-] = ₹ 56,08,544/-. On appeal, the Ld. CIT(A) taking note that assessee had disclosed GP of 26.86% for the AY 2011-12, restricted the addition to the GP of 26.88% of ₹ 56,08,544/- which comes to ₹ 15,07,579/-. Still not satisfied with the action of the Ld. CIT(A), the assessee is before us challenging the impugned order and we note that the assessee was supplying pipes to Govt. of West Bengal [Public Health Department] and was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales figures of ₹ 2.52 cr. and purchases of ₹ 1.9 cr.] and that the physical existence of closing stock of goods worth ₹ 25 lacs as per the books has also been accepted. This goes on to show that the inflow and outflow of materials crystallizing into the inventory at year end has not been doubted. And we note that the assessee has already declared GP of 26 % on audited accounts which have been accepted by the AO. Further, it is noted that assessee had declared under Income Declaration Scheme 2016 offered @ 4% on total alleged bogus purchase of ₹ 56.75 lakhs (₹ 2.33 lakh) as undisclosed income to cover the cost of arranging the bills accommodation entry. We note that the PCIT-16 had accepted the declaration a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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