TMI Blog2019 (4) TMI 2153X X X X Extracts X X X X X X X X Extracts X X X X ..... bank statement in support of the impugned purchases claims right from assessment till the instant second appeal proceedings. All the said details have nowhere been rebutted at the AO s end. Revenue fails to dispute the clinching fact that the assessee s corresponding sales have already been accepted as correct. We therefore see no reason to restore the impugned bogus purchase disallowance canvassed in Revenue s former appeal. 10% ad hoc estimated disallowance by comparing the corresponding figures of the impugned assessment year vis-a-vis preceding assessment year - HELD THAT:- We afforded ample opportunities to the learned departmental representative for pin-pointing any specific defect; head-wise in the impugned claims comprising of clearing charges, computer repair, container rent, custom duty, CWC charge, DEPB premium, doc clearing charges, interest paid, service and testing charges and TDSC transportation charges alongwith other heads. There is no such discussion on the assessment order pointing out any such defect in all these specific heads. AO had not put even a single head to factual verification from recipient side as well. We conclude in these facts that the CIT(A) has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned purchases therefore on the ground that the assessee had failed to prove genuineness thereof during the course of assessment(s) in issue. The CIT(A) has reversed the same in his identical lower appellate discussion as follows:- I have considered the material before me. The A.O received information from the DGIT(Inv.), Mumbai that the assessee had made bogus purchases from Sarnpark Steei .Rs.12048401-, Prayan Trading Co.- Rs. 1506960, Bhagwati Trading Co.-Rs. 1291680, Sriji Traders-Rs. 1543828/-, and Vitraag Trading Co. for Rs 17,97.760, respectively on account of admission by the aforesaid parties to their sales tax department at Mumbai, which was confronted to the appellant. The appellant in his reply to the A.O denied the allegation regarding making the said bogus purchases. It was argued that the purchases are genuinely made by him and all payments have been made by a/c payee cheques, and corresponding sales have been shown. It was also argued that there cannot be sales unless purchases. Further, the appellant offered to furnish further information, if any required. However, the A.O completed the assessment without allowing any further opportunity to the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trading Company, one of the traders, whose names appeared in the list of alleged suspicious dealers prepared by the sales Tax Department, Mumbai for the A.Y 2010-11 under consideration, wherein the purchases made from said Bhagwati Trading Co, have been accepted as genuine by the Hon'ble ITAT, which held as under. We find that the AO has not doubted the genuineness of the purchase but made me disallowance of Rs. 1,37 crores by invoking the provisions of 69C of the, Act. We find that in similar circumstances the Tribunal had deleted the addition made by the AO in the cases relied upon by the AR of the assessee. In the case of Rajiv G . Kalathil (supra) to which one us was party identical issue has been decided as under: 2.4 We have heard the rival submissions and perused the material before us. We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT department. We agree that it was a good starting point for making further investigation and take it to logical end. But he left the job at initial point itself. Suspicion of highest degree cannot take place of evidence. He could have called for the details of the bank accounts off the sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transporter by a/c payee cheque; TDS deduction from the freight charges as applicable, and depositing TDS amount, and Stock the onus having shifted to the AO he failed to bring any adverse evidence on record to rebut the presumption of the of the purchases being genuine unless established otherwise. Further, the AO had not find any patent defects in the books of accounts nor rejected the book results which were based on audited accounts. Therefore, the facts of the appellant s case are found to be covered by the ratio of the ITAT, Mumbai s decisions in the case of ITO vs. Paresh Arvind Gandhi (supra). In view thereof, I am of the view that the A.O was not justified in treating the impugned amount of Rs. 73,35,068/- as bogus purchases. The A.O is directed to delete the addition of Rs. 73,35,068/-. These grounds are allowed. 3. We have given our thoughtful consideration to rival contentions. The Revenue vehemently contends during the course of hearing that the CIT(A) has erred in law as well as on facts in treating bogus purchase disallowance(s) in issue as genuine in both the impugned assessment years. It strongly emphasizes the fact that the Maharashtra State Sales Tax / VAT depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet assessee claimed import direct expenses of Rs. 1,33,63,218/-, whereas in the preceding year it was only Rs. 62,62040/-. The assessee was requested vide snow cause notice date 13.12.13 to substantiate the claim. It appears that the assessee claimed expenses under new heads as per schedule of Direct expenses though nature of business was remained same. The assessee claimed expenses under new heads like clearing charges 94615/-, computer repair 69431/- carriage inward 137373/-, century ply board 54358/-, container rent 49771/-, custom Duty Rs. 4022884/-, CWC charges 157188/-, DEPB premium Rs. 1940228/-, Dock clearing charges 86569/-, interest paid (IMP Purchase) Rs. 11 0590/-, service charges. 116750/-, Testing charges 129243/-, THC Rs. 454749/-, Transportation Charges 2954418/- etc. There was no claim under these heads in earlier year. Even the assessee claimed expenses under various heads which are not consistence with preceding year. In its reply by letter dated24.02.2014 the A.R. stated that custom duty, freight, have been increased due to increase in import interstate purchase. It appears from the submission that assessee's import was increased by 156% whereas expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e like clearing charges, computer repair, container rent , custom duty, ewe charge, DEPB premium, doc clearing charges, interest paid, service and testing charges and TSC, transportation charges, were claimed during the current A.Y. which were not there in the preceding year. The A.O. rejected the explanation that custom duty and freight has been increased due to increase in import and interstate purchase by holding that the appellant had failed to discharged the onus of having Incurred the expenses for purpose of business and disallowed 10% of the expenses amounting to Rs. 1336322/- as bogus expenses. The appellant's A.R. has argued to the written submission that the expenditure claimed were incurred wholly and exclusively for the purpose of business and all expenses were supported by bills and vouchers and were paid through cheques. Further, it was stated that due to regrouping and different presentation of expenses in the balance sheet as compared to preceding year let to the erroneous observation by the A.O. of disproportionate increase in the expenditure under the head of indirect expenses. After careful consideration it is observed that there is substance in the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X
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