TMI Blog2022 (12) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... the correctness of the claim made by the assessee. The assessee may file the necessary confirmation given by the Bank of India, the assessee s banker, to the effect that the deposits made with the bank are duly tallying with the assessee s books of accounts. - ITA No. 514/Ahd/2018 - - - Dated:- 7-11-2022 - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri Mohit Balani, A.R. For the Revenue : Shri Shramdeep Sinha, Sr. D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-1, Ahmedabad in Appeal no. CIT(A)-1/DCIT Circle-1/395/2014-15 vide order dated 22/12/2017 passed for the assessment year 2011-12. 2. The assessee has raised the following grounds of appeal: This Appeal is against the Order of the Commissioner of Income-tax (Appeals)-1, Ahmedabad and relates to the Assessment year 2011-2012. 1) The learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs. 77,12,502/- in respect of purchases from M/s. Virat Enterprises. 2) Both the lower authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the additions made by the assessing officer primary on the ground that the assessee has not been able to establish the identity of the party (M/s Virat Enterprises), the assessee is unable to produce the party, the assessee does not have the PAN number of the party and accordingly, since the party s identity itself is not established, the Ld. Assessing Officer has correctly held that the purchases are bogus. The Ld. CIT(Appeals) while confirming the additions, made the following observations in the appellate order: 5.6 I have carefully considered the Assessment Order and submission filed by the Appellant. The Assessing Officer has observed that Appellant had claimed purchases made from one Virat Enterprise. However, the Appellant could not produce confirmation of accounts not produce the creditor. In turn, the Appellant contested that it had produced all the invoices and the payments have been made through the banking channel. Having considered the facts on record and the settled legal position, I do not agree with the Appellant's contention for the following reasons:- a) Even though proper procedure 'was followed and the taxpayer proved the genuineness of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishment of the genuineness of the transactions or the creditworthiness of the creditors did not and could not arise. It was not for the Income-tax Officer to find out by making investigation from the bank accounts unless the assessee proves the identity of the creditors and their creditworthiness. Mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine. Accordingly, the disallowance made by the AO is upheld and these grounds of appeal are dismissed. 6. The assessee is in appeal before us against the aforesaid additions confirmed by Ld. CIT(Appeals) in the appellate order. The primary contention of the assessee is that the assessee had placed before the Ld. CIT(Appeals) copies of invoices issued by such party, Lorry receipts in support of proof of delivery of material to the assessee and bank statement of the assessee showing that the payment to such party was made by way of account payee cheques. Further, the assessee submitted that the Department has failed to appreciate that the invoices furnished by the assessee had mentioned the CST as well as the VAT Tin number of the supplier. In the alternative, the counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. In the case of Premkumar B. Rathi [2015] 59 taxmann.com 203 (Gujarat), the Assessing Officer opined that assessee failed to discharge onus of proving genuineness of aforesaid purchase; he, thus, made addition of 25 per cent of total purchases taking it as 'unexplained purchase'. The Commissioner (Appeals) reduced addition to 20 per cent on account of unexplained purchases. The Tribunal further reduced said disallowance to 10 per cent of purchases relying on decision of coordinate bench of Tribunal. The Gujarat High Court upheld the order of Tribunal and held that the same did not require any interference and confirmed the disallowance @10% of bogus purchases. In the case of Jagdish H Patel [2017] 84 taxmann.com 259 (Gujarat), the Gujarat High Court held that where AO having found that during year assessee had made bogus purchases of certain amount added said amount to his income and Tribunal having found that assessee's GP for year under consideration was 7 per cent, adopted GP rate of 8 per cent on purchase and reduced addition, Tribunal was justified. In the case of Simit P. Sheth [2013] 38 taxmann.com 385 (Gujarat), the assessee was engaged in business of tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings, the AO observed that from Schedule-7 of the balance sheet, the assessee has shown fixed deposit of ₹ 94,47,000/-, however from the AIR information, the assessee had made investments in fixed deposits of ₹ 1,04, 77,500/-. The AO held that despite having been granted sufficient opportunity, the assessee has not been able to explain/reconcile the difference highlighted above, and accordingly, the AO added an amount of ₹ 10,30,500/- as unexplained deposits in the hands of the assessee. 9. In appeal, Ld. CIT(Appeals) confirmed addition with the following observations: 9.3. I have carefully considered 'the Assessment Order and submission filed by the Appellant. The Appellant has not provided or brought any evidences on record before the AO. However, the Appellant has explained that balance sheet figures contain only the closing balance of FDRs but has failed to support the same with any independent documentary evidences. After carefully considering the facts brought on record, I am of the view that explanation appears to be logical but is unsubstantiated. The Appellant ought to have provided a reconciliation statement explaining the difference between ..... X X X X Extracts X X X X X X X X Extracts X X X X
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