9911796707
TMI Blog2022 (2) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 (hereinafter referred to as 'the Act') dated 26.12.2016. The assessee has raised the following grounds of appeal:- "(I) Estimate of profit at 25% on the bogus purchases of Rs. 7,30,390 and Rs. 1,83,28,467. (1) On the facts and circumstances of the case, the learned CIT(A) was not justified in estimation of profit @ 25% of the purchases particularly there was no rationale for any addition at all. (2) In any case, the learned CIT(A) ought to have accepted the element where purchase were made both in cash and cheque. (3) Without prejudice to the above, the estimate needs to be reduced. (II) Miscellaneous: The appellant craves leave to add, alter or vary any of the grounds of appeal." 2. Brief facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that some of the parties were not available or working with some other name or shifted their business address. On the basis of report of inspector of his ward and the purchases bill of various parties which were below Rs. 20,000/- totaling to Rs. 1.83 crores which were paid in cash, the Assessing Officer issued show cause notice why such expenses amount should not be treated as bogus purchase. The assessee filed his reply dated 22.12.2016 and submitted that delivery challans for transfer of goods and submitted that assessee cannot be faulty if the inspector could not find out the parties as their given addresses. On the show cause notice, entire disallowance of assessee stated that assessee has earned only 6.67% of gross profit from his tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer on the basis of report of his inspector came to the conclusion that assessee made bogus transaction to suppress the profit and made addition during the assessment, the assessee provided copy of ledger account but to demonstrate that Jari purchased by assessee was genuine. The assessee has explained that primary ground of holding the purchase as bogus recorded in para-4.1 in assessment order. The assessee explained that he made purchase of Rs. 1.83 crores in cash. The assessee sold sarees in cash aggregating Rs. 1.64 crores and furnished the day-to-day cash sales book details for entire financial year. The Assessing Officer is not justified in doubting the sales of the assessee. The Ld. CIT(A) after considering the submission of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer (2016) 76 taxmann.com 366 (Guj) held disallowance of purchase was restricted to 25% of the total purchases. Further aggrieved the assessee has filed present appeal before the Tribunal. 5. We have heard the submissions of Ld. Authorized Representative (AR) for the assessee and Ld. Senior Departmental Representative (DR) for the Revenue and have gone through the orders of lower authorities carefully. At the outset of hearing, Ld. AR of the assessee submits that the assessee has engaged in business of trading saree with certain sarees with Jari (gold thread) embroidery. The Assessing Officer made addition primarily on the ground that certain suppliers were not found and on account of non-availability of parties at the given address th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Guj) * CIT-III vs. Sathyanarayan P.Rathi (2013) 38 taxmann.com 402 (Guj) * CIT vs. Bholanath Poly Fab (P) Ltd. (2013) 40 taxmann.com 494 (Guj) * Vijay Trading Co. vs. Income-tax Officer (2016) 76 taxmann.com 366 (Guj) * Vijay Proteins Ltd. vs.CIT (2015) 58 taxmann.com 44 (Guj) * Mayank Diamonds Pvt. Ltd. vs. DCIT,Cir.3(1) Surat ITA No.341/AHD/2002 dated 30.09.2002 * Mayank Diamonds Pvt. Ltd. vs. ITO TA No. 200 of 2003 dt. 07.11.2014 7. On the other hand, Ld. Sr.DR for the Revenue submits that Assessing Officer during assessment in para 8.1 has clearly recorded his finding. The Assessing Officer recorded that assessee was unable to produce the said parties as most of the parties were not available only given address and in some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer nor the Ld. CIT(A) tried to find out the profit element embedded in such transactions. Therefore, in absence of any material the conclusion to arrive that profit margin in the impugned transaction is 25%, the addition of 25% is not justified. The assessee has shown its profit @ 6.67%. It is settled law that even if the transaction of disputed purchases is not fully verified, the revenue authority are not entitled to tax the entire transaction, rather the profit element embedded in such transaction is to be tax. In our view, when the assessee himself has shown profit at 6.67%, the disallowance @ 8% of such disputed purchases would meet the possibility of revenue leakage. Therefore, we direct the Assessing Officer to restrict the purc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
