TaxTMI 
TaxTMI 
2014 (6) TMI 605
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....he Assessing Officer may be directed to make a further addition based on Net Profit Margin @ 10% of the alledged non genuine purchases in view of non verifiability. The appellant prays that the addition made on account of non-genuine purchases being unwanted, unwarranted, bad in law, illegal be suitably reduced based in Net Profit Margin shown in books of accounts. GROUND III :- On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeal) - 35 (,hereinafter referred to as 'the CIT(A)') has erred in confirming the addition made in respect of unaccounted sales to the extent of Rs. 32,87,529/-. The appellant prays that the addition made on account of undisclosed sales unwanted, unwarranted, bad in law, illegal be deleted. 2. Ground no. 1 and 2 is regarding addition on account of non-genuine purchases. 3. The assessee is a partnership firm dealing in resale, fixing providing of glass, aluminum section, repairs of glass doors, windows and undertaking contract for providing and fixing of doors, windows etc. During the course of assessment proceedings the AO issued notices u/s 133(6) to some of the sundry creditors on random ....
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....ecord of Government of Maharashtra, Sales Tax Department, as they are regularly filing their return and paying VAT. The Ld. AR forcefully contended that when the AO has not doubted the corresponding sales and assessed the income based on the corresponding sales then the disallowance of the purchases on the basis of suspicion is not justified. Alternatively the Ld. AR has submitted that the assessee has offered more than 10% income on the sales and, therefore, the disallowance of entire purchases from these two parties is otherwise not justified when the assessee's net profit margin is more than the prevailing margin rate in the industry. Thus the Ld. AR has pleaded that the AO could at the best have made the addition based on net profit margin at 10% of the alleged non-genuine purchases in view of non verifiability. He has further submitted that the payment to these parties were made by Account Payee cheques and goods were duly received by the assessee. He has relied upon the decision of Hon'ble Jurisdictional High Court in the case of Nikunj Eximp Enterprises Pvt. Ltd., wherein it has been held that if the sale has been accepted the purchase cannot be treated as non genuine. Thus ....
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....erprises itself has not supplied the goods to the assessee and, therefore, there is no match of supply of goods and the payment made by the assessee. Further the assessee is also undertaking the work of fixing doors and windows as well as repair works and, therefore, it is not the case of pure trading of purchase and sale of the goods without any value addition by the assessee and charges for other services provided. Thus in the absence of quantitative reconciliation of the purchase and the goods used in the execution work as well as sold it is not possible to match the purchases and sales because the sales of the assessee involves consumption of the goods as well as the work executed by the assessee under the contract. The assessee has also failed to establish the actual delivery of goods by production of all details in the challan like quantity and nature of goods supplied under the challan. Further the mode of transportation and proof of transport of the goods purchased by the assessee are also not brought on record despite due opportunity given in the assessment proceedings as well as in the remand proceedings. Accordingly, we concur with the view of the authorities below that ....
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....accounted as sales in the subsequent assessment year i.e. A.Y. 2010-11, therefore, the addition cannot be made on the entire sale amount but the profit element in the sale can be added. The Ld. AR has further contended that the work was executed in the subsequent year, therefore, the assessee has recognized the sale only in the next year. In respect of the other two parties there may be mistake in the AIR information because the assessee has not booked the TDS of these amounts. It was further submitted that in case of M/s Dosti Corporation the amount pertains to the excess bill booked by the supplier and the assesee has received the amount of outstanding bill only to the extent of work done by it and, therefore, the said amount was not due from the said party. 12. On the other hand, Ld. DR has relied upon the orders of authorities below. 13. We have considered the rival submissions and relevant material on record. The Assessing Officer has made the addition on account of unaccounted sales in respect of the sale made to the following four parties ;- 14. The above discrepancy was noted by the Assessing Officer as per the AIR information. The CIT(A) has directed the Assessing....