TMI Blog2022 (7) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... trade creditors who have supplied the goods to the assessee. Therefore, in the facts and circumstances of the case we are of the view that when the assessee s books of account are not reflecting the correct affairs and book results are not rejected at most the income of the assessee is required to be estimated after rejecting the books of accounts. This is view taken by us is based on the decision of Hon ble Bombay High Court in the case of PCIT Vs. Mohmmad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT ] As the assessee has not placed the details of the profit of its regular business turnover via a vis the turnover of these bogus entry provider purchase and sales. The said details may be verified by the assessing officer and the AO is directed to add appropriate rate of profit in these transactions. Accordingly, we set aside this matter to the record of the AO to estimate the income of the assessee on the basis of the turnover shown by applying a proper and reasonable basis being GP/NP rate. Accordingly Ground No. 1 is partly allowed. - ITA No. 387/JP/2018 - - - Dated:- 30-6-2022 - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 17,31,09,008/- To ascertain the genuineness and creditworthiness of the sundry creditors/purchases claimed by the assessee, the AO issued noticed U/s 133(6) of the Act to the above-mentioned creditors at the addresses furnished by the assessee but the said notices returned back as unserved. When this fact was confronted with the assessee it was explained that due to Diwali Festival the creditors were not available at the given address. The AO again issued notice U/s 133(6) of the Act to the creditors on 18.11.2016 but the same were returned back unserved for second time. Consequently, the AO has issued a show caused notice dated 25.11.2016 to the assessee requesting to submit the details. The assessee furnished new address of the creditors but the assessment was time barring in the month of December therefore, the AO asked the assessee to produce the sundry creditors along with relevant documents. Further, the AO observed from the details furnished by the assessee that the assessee did not repay his outstanding dues to the creditors through banking channel but the same were settled through the sale of same goods to sundry creditors. The AO ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unverifiable and at the same time not doubting the sale. Therefore, the addition is unlawful, illegal and not justified as the same has been made with a confused state of mind. The assessee has submitted income tax return, bank account, copies of purchase bills and confirmations with the complete addresses of these creditors. Thus, the assessee has discharged its onus to prove the identity and creditworthiness of creditors as well as genuineness of the transactions. He has relied upon the following decisions:- Sambhav Gems Ltd. Vs. ACIT (2006) XXXVT.W.254 (ITAT, Jaipur). Parasmal Jain vs. DCIT in ITA No. 40/JP/2005( ITAT), Jaipur. Prkash Chand Vijay in ITA No. 26/JP/2005. (ITAT), Jaipur Sagar Mal Dagta Co. Vs. ITO (2004) XXXII Tax World 40 (ITAT, Jaipur). M/s Om Metals Minerals Ltd. vs. JCIT (2004) XXXII T.W. 54 (ITAT, Jaipur). Shiv Trading Co. Vs. ITO, 30 Tax World, 117(Jaipur). Raunaq Finance Co. vs. JCIT 141 Taxman 72 (Raj.) DCIT vs. Brahmaputra Steel (P). Ltd. 76, ITI 44 (Guj). DCIT vs. Adinath Industries 252 ITR 476 (Guj.). 3.1 Alternatively, the ld. AR has submitted that the addition made U/s 68 of the Act on account of trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sections or entries cannot control the plain words of the provision; they cannot also be referred to for the purpose of construing the provision when the words used in the provision are clear and unambiguous; nor can they be used for cutting down the plain meaning of the words in the provision. Only, in the case of ambiguity or doubt the heading or sub-heading may be referred to as an aid in construing the provision but even in such a case it could not be used for cutting down the wide application of the clear words used in the provision. In the case of Bhinka And Others vs Charan Singh 1959 AIR 960, 1959 SCR Supl. (2) 798, it has been observed by the Hon'ble Apex Court that: Maxwell On Interpretation of Statutes , 10th Edn., gives the scope of the user of such a heading in the interpretation of a section thus, at p. 50 : The headings prefixed to sections or sets of sections in some modern statutes are regarded as preambles to those sections. They cannot control the plain words of the statute but they may explain ambiguous words. If there is any doubt in the interpretation of the words in the section, the heading certainly helps us to resolve that doubt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. DR heavily relied upon all the judgements and orders of the authorities below. 5. We have persuaded the rival submissions as well as the relevant submissions and decisions placed on record by both the parties. Having gone through the same it is evident that the assessee has shown the trade creditors to the tune of Rs. 17,36,37,142/- on account of credit purchase made from three parties namely Mona Impex, M/s Ridhi Sidhi Gems and M/s Prathmesh Traders from Surat. The AO doubted the genuineness of the trade creditors shown by the assessee in the balance sheet on account of the purchases made by the assessee. The ld. AR submitted that the Assessing Officer instead of rejecting the books results of the assessee proceeded to make addition of the entire amount of the trade creditors which are settled in the subsequent year by the assessee and the same is not doubted while making the assessment of the subsequent year and filed the copy of the subsequent year assessment order. The corresponding sales shown by the assessee has not been disturbed by the AO in the subsequent year for those parties. Even for the assessment year 2015-16 the AO while passing the scrutiny assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer desp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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