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TMI Blog2020 (6) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... unjust and has erred in law in not accepting plea of the appellant that proceedings initiated by the assessing officer u/s 148 of the Income Tax Act, 1961 and consequent assessment made u/s 147/143(3) is wrong and bad in law. 2. That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case the Ld. CIT(A), is wrong, unjust and has erred in law in upholding addition to the extent of Rs. 4,62,549/- by applying G.P rate of 11.50% on declared sales which addition was made by the assessing officer on account of alleged unverifiable purchases of Rs. 50,79,735/- after rejecting books of accounts of the appellant under section 145(3) of the I.T. Act, 1961." ITA No. 1066/JP/2019 "1. Whether on the facts and circumstances of the case and in law the ld. CIT(A) was justified in restricting the addition of Rs. 12,69,933/- to Rs. 4,62,549/- against the bogus purchases disallowed by the AO following Hon'ble Supreme Court's decision on bogus purchases in the case of Vijay Proteins Pvt. Ltd.? 2. Whether on the facts and circumstances of the case and in law the ld. CIT(A) was justified in deleting the additions made on the basis of corroborative informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptions as so stated in the said CBDT Circular. Further, ld. AR has placed reliance on the decision of the Co-ordinate Bench in case of DCIT vs M/s Gehlot Motors Pvt Ltd (ITA No. 1165/JP/2019 dated 29/11/2019). 8. Heard both the parties. In this regard, we refer to the CBDT directive dated 20th August 2018 by which it has carved out several exceptions to its Circular No. 3 of 2018 dated 11th July 2018 relating to the withdrawal/ non-filing of appeal by the Department in low-tax effect appeals. The CBDT has specified several instances where appeals have to be filed and prosecuted despite their low-tax effect. The contents thereof read as under: "All the Principal Chief Commissioners of Income Tax Subject: Amendment to para 10 of the Circular No. 3 of 2018 dated 11.07.2018-reg: Madam/Sir, Kindly refer to the above. 2. The monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/ appeals before Supreme Court have been revised by Board's Circular No. 3 of 2018 dated 11.07.2018. 3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said para should be contested on me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is binding on the Revenue and the same is the consistent position of this Bench and other Benches of the Tribunal. 10. In light of the same, the present appeal filed by the Department is dismissed on account of low tax effect given that the matter is not covered by any exceptions so specified. 11. Now coming to the assessee's appeal. During the course of hearing, the ld. AR submitted that no basis has been given by the Assessing Officer for rejecting the books of accounts and invoking the provisions of section 145(3) of the Act. It was submitted that during the course of assessment proceedings, the assessee has submitted sample purchase bills for the said purchases so made by the assessee and has also submitted that the payment has been made by account payee cheque. However, based on alleged statement of Directors of M/s Rajendra Jain Group of companies, the Assessing Officer has alleged that the assessee has obtained bogus accommodation entry from three concerned as mentioned in the assessment order. It was submitted that the assessee's objection to cross examine the Directors of Rajendra Jain Group of companies was not considered by the AO as well as by the ld. CIT(A) and merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities. 14. We have heard the rival contentions and perused the material available on record. For the year under consideration, the assessee has declared total turnover of Rs. 3,17,37,004/- with a gross profit of 10.04%. The A.O. has considered the purchases to the tune of Rs. 50,79,735/- made from these three parties as unverifiable. The A.O. consequently rejected the books of account of the assessee by invoking provisions of Section 145(3) of the Act and made disallowance of 25% of the aforesaid purchases. Hence, the A.O. has made addition of Rs. 12,69,933/-. Though, the assessee has challenged the action of the A.O. before the ld. CIT(A), however, the ld. CIT(A) has confirmed/upheld the disallowance made by the A.O. by observing that the assessee failed to establish the genuineness of the purchases made from these parties. It is pertinent to note that the even if the A.O. has doubted the genuineness of the purchases from these parties, once the books of account of the assessee are rejected by invoking provisions of Section 145(3) of the Act, the A.O. is bound to frame the assessment on best assessment as per provisions of Section 144 r.w. Section 145(3) of the Act. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o facts and circumstances of the case in A.Y 2009-10 and similar contentions have been advanced by both the parties. 16. Firstly, we find that all the appeals filed by the Revenue are below the prescribed threshold for filing the appeals and are not covered in the exception category, hence, all these appeals filed by the Revenue for respective assessment years are dismissed on account of low tax effect for detailed reasoning given supra in context of A.Y 2009-10. 17. In respect of assessee's appeals, for A.Y 2012-13, the assessee has declared GP of 10.57%. If we consider the average GP for past 5 years which has been declared and accepted by Revenue and has attained finality, excluding A.Y 2009-10 where GP so declared has not been accepted by the Revenue on account of accommodation entries, it comes to 10.15%. Thus, the GP declared by the assessee is more than the average GP of past years and even where the books of accounts are rejected, no trading addition is called for and the appeal of the assessee is thus allowed. 18. In respect of assessee's appeal for A.Y 2013-14, the assessee has declared GP of 9.01% which is lower than the average GP for past 5 years which comes to 10.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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