TaxTMI 
TaxTMI 
2012 (8) TMI 737
X X X X Extracts X X X X
X X X X Extracts X X X X
.....1,00,000/-. The letters were returned as unserved in the case of at least 22 parties with postal remarks like "no such address", "not known" etc. No reply was received from at least another 11 parties. 3. In the above circumstances, the assessee was asked to prove the genuineness of the purchases by identifying the creditors and furnishing other relevant details. The assessee filed copies of the parties' ledger accounts as reflected in assessee's books and copies of purchase bills. It was also submitted by the assessee that the payments were made by cheques. On verifying the bank statement, the assessing authority found that most of the payments made by the assessee have been encashed at Ahmedabad, Kolkata, Mumbai and New Delhi. The Assessing Officer observed that these places were not mentioned anywhere in the purchase bills. 4. As a culmination of the above findings, the Assessing Officer treated the purchases reflected in the name of those parties totalling to Rs.79,39,637/- as bogus. This was added to the income returned by the assessee. 5. The assessee has claimed expenses of Rs.12,72,513/- in the profit and loss account under various heads. The Assessing Officer fou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the assessee came in second appeal before the Tribunal. 10. The grounds raised by the assessee in the present appeal read as below : "2. For that the Commissioner of Income-tax(Appeals) erred in confirming the disallowance made by the Assessing Officer of a sum of Rs.79,39,637/- as bogus purchases. 3. For that the Commissioner of Income-tax(Appeals) erred in rejecting the explanations and evidences furnished by the appellant in the course of appellate proceedings. 4. For that the Commissioner of Income-tax(Appeals) failed to duly appreciate that the appellant had issued the cheques to her suppliers towards materials supplied by them and that the further endorsement of these cheques to third parties was in no way connected to the appellant. 5. For that the Commissioner of Income-tax(Appeals) failed to give due consideration to the fact that the appellant had already produced evidence of her purchases at the time of assessment proceedings before the Assessing Officer, by way of bills. 6. For that without prejudice to the above, the Commissioner of Income-tax(Appeals) failed to appreciate that if the purchases of the appellant are treated as bogus, the corresponding....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould be more than 35%, which is quiet unheard in this line of business. The learned Chartered Accountant explained on the other hand, that the assessee has disclosed normal gross profit in the impugned assessment year. In these circumstances, it is his case that the lower authorities went wrong in treating the purchases as bogus and making the addition of Rs.79,39,637/- to the income of the assessee. 13. He also objected to the disallowance made at 20% of the expenses which amounted to Rs.2,54,053/-. He contended that the issue is not at all considered by the Commissioner of Incometax( Appeals). 14. Shri Vikramaditya, the learned Commissioner appearing for the Revenue, on the other hand, contended that the assessee was given enough opportunities to prove the disputed purchases but still the assessee could not prove the bona fides and therefore, the Assessing Officer is justified in making the addition. He stated that at the first instance, the Assessing Officer had issued notices under sec.133(6) to confirm the purchases made by the assessee. No creditor replied to those notices. It is in the remand proceedings as directed by the Commissioner of Incometax( Appeals) that the l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....purchases made by her. In the remand proceedings the creditors have confirmed the sales made to the assessee so also receipt of the cheques and drafts issued by the assessee. The purchases have been accounted in the books of account. The sales reported by the assessee have been accepted by the assessing authority. The sales have been made out of the opening stock and purchases made by the assessee. If the purchases omitted by the assessing authority are really excluded from the stock account, it would not have been possible for the assessee to arrive at the sale figures reported by her. It is to be seen that the income generates out of the sales. When all these facts are taken into consideration, it is not possible for us to endorse the view of the lower authorities that the entire such purchases objected to by them should be treated as bogus. 19. At the same time, it is also not possible to accept the entire contentions advanced by the assessee. At the first instance, in the course of assessment proceedings, the details were not furnished before the assessing authority. The letters sent to the creditors were returned. It is in the remand proceedings that the situation developed....