TMI Blog2021 (10) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... able on record comes to 25.18% as against 24.80% declared by the assessee. Therefore, the addition to the extent of differential of 0.38% is sustained and the remaining addition sustained by the ld CIT(A) is hereby directed to be deleted. In the result, the ground of appeal is partly allowed. Disallowance of certain expenses claimed in its profit/loss account - During the course of hearing, the ld. AR submitted that these expenses relates to telephone, mobile, vehicle running maintenance and depreciation on car - HELD THAT:- AO has disallowed an amount of ₹ 20,000/- only out of total expenditure of ₹ 1,82,510/- on account of personal and non business used. It was accordingly submitted that considering the above facts and circumstances of the case, the nature and involvement of the assessee s business, the ld. CIT(A) has rightly upheld the disallowances of ₹ 20,000/- to cover possible leakage on account of personal expenses. It was accordingly submitted that there is no infirmity in the order so passed by the ld. CIT(A) and the same may be confirmed. We have heard the rival contentions and perused the material available on record. We find that the expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not been disputed by the Assessing Officer. It was accordingly, submitted that there is no basis for the AO to treat the purchases as bogus and disallow 25% of the said purchases. 5. Per contra, the ld. DR submitted that it is no doubt through that the assessee has made purchases from M/s Red rose Enterprises, however in order to verify the said purchases, summons U/s 131 were issued which were return unserved with the report that the said concern was not found at the given address. It was accordingly submitted that the mere facts that the payment has been made by the account payee cheque does not prove that the assessee has proved the genuineness of the purchases so made by it. It was accordingly submitted that the AO disallowed 25% of the bogus purchases which is approximately equally to the G.P. shown by the assessee and the same has rightly been confirmed by the ld. CIT(A) and therefore, the said order should be confirmed. 6. We have heard the rival contentions and perused the material available on record. We find that the Assessing officer has rejected the books of accounts by invoking the provisions of section 145(3) and the same are not under dispute before us. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct bills. Of course, total openting balance of all parties is ₹ 1,15,43,782/- and the closing balance is ₹ 1,33,36,193/-. However, looking to the accretion in the closing balance of the concerns for which Revenue has material, the addition confirmed by the ld. CIT(A) is reasonable 2.30 The Hon ble P H High Court in the case of Uplakesh Metal Industrial V CIT 177 taxman 298 held that issue decided by this is in the realm of appreciation evidence. The find of Tribunal as mentioned in this judgment is as under:- However, in our opinion the observation of the Assessing Officer that the assessee was prima facie required to prove the genuineness of the transaction and identity of the creditors is not misplaced because there is no distinction laid between the trade creditor and the non-trade creditor and we are further of the opinion that in case the assessee claims liability of payment to the trade creditors shown in the balance-sheet, the assessee is definitely required to prima facie prove the identity of the trade creditors as well as the genuineness of the transaction. In this case, admittedly the assessee has neither been able to disclose the complete addre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of the assessee the AO not given any finding of inflated purchases by the assessee but doubted the very transaction of purchases due to non production of these parties before the AO. The AO has not given the finding that the prices of the goods was inflated by the assessee but the AO doubted the genuineness of the purchases on the ground that the suppliers were found to be accommodation entries providers. When the AO rejected the book results u/s 145(3) of the Act, then the AO after rejection of the books of account can proceed to make the assessment on the basis of best judgment instead of resorting make the addition to the book results. Accordingly, in the facts and circumstances of the case and in view of the decision of this Tribunal in assessee s own case for A.Y. 2006-07 we do not find any error or illegality in the orders of the ld. CIT(A) in restricting the addition to the average GP rate based on the past history. Hence, the grounds raised in the Revenue appeals are rejected being without any substance or merits. 7. In the instant case, the average gross profit for the past two assessment years as available on record comes to 25.18% as against 24.80% declar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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