TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 19
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.... Ld. CIT(A) has erred in deletion of the addition of Rs. 20,000/- on account of bogus purchase of M/s Monoharlal Mahabir Prasad on the ground that the AO has not conducted any enquiries either during the assessment proceedings or at the remand report stage. 3. Under the facts and circumstances, Ld. CIT(A) was not correct in deleting the addition of Rs. 3,51,117/- on account of inflated purchase from M/s Atul Enterprises on the ground that AO failed to conduct enquiries and bring on record any material records contrary to the claim of the assessee and merely on the basis of assessee's arguments. 4. under the facts and circumstances, the Ld. CIT(A) has erred in deleting the addition of Rs. 37,27,578/- on account of inflated purchase from M/s Unisilk on the ground that AO should have verified this aspect from different sources including Custom authorities and other Govt. agencies to ascertain the real value of the goods reported if comparative market rate was not available. 5. Under the facts and circumstances, the Ld. CIT(A) has erred in allowing the assessee's appeal regarding the addition on account of Cessation of liability of Rs. 1,21,553/- w.r.t. M/s A.B.N. Laminators....
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....7000.00 per kg. in order to avail the DEPB credit to the tune of Rs. 4.80 crores. Whereas the sale price of the same from the reputed manufacturer of glass beads ranges from Rs. 70 to 100 per kg. 3.1 In view of the above the AO held that the purchases are bogus and worked out the genuine purchase as under : S.No. Description of goods Quantity Rate Amount (Rs.) 1 Glass beads 9266 Kgs. 1000/- Rs. 19,26,600/- Glass Chatons 25000 dozens 3/- Rs. 75,000/- Total 'B' Rs. 20,01,600/- Difference (A-B) Rs.12,87,93,900/- Say Rs. 12,87,94,000/- The AO has disallowed the above purchase by treating it bogus purchase and added to the total income of the assessee. 3.2 Aggrieved, assessee preferred appeal before Ld. CIT(A) who deleted the addition made by the AO by observing as under:- "iv. I have perused and examined the above documents furnished before me and also perused the assessment records wherein almost all the above said documents are available. I have also gone through the relevant facts of the appellant connected to enquiry made by the Customs Department. Some of the documents are available in the ....
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....during the relevant point of time i.e. F.Y 99-00 relevant to the AY 2000-01, M/s Madho Prasad Mahabir Prasad supplied glass beads both to the appellant and also to M/s Ramapati Exports. I agree with the views expressed by the Ld. AR that the case of M/s. Ramapati Exports is identical and connected to the appellant's case and therefore the ruling given in that case would apply to the app's case also. It is relevant to reproduce a portion of the extract of appellant's submission dt. 26.03.09 as under:- 'From the above it s crystal clear that Your Appellant Exported goods being Glass Beads & the same is not disputed, the price at which exports have taken place has been accepted by the Customs Department itself during the assessment of all the shipping Bills. In the case cited ii 8 above Export Price of US $162 i.e. the same price at which we had made exports was approved & no over-invoicing could be proved by the department. The basis of downward revision of purchase price by the Assessing Officer was the report of customs which itself stands rejected after the order of the CESTAT & value taken for exports i.e. US 162 or Rs. 7000/- per KG was found to be genuine. As ....
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....a dt. 14.02.2000 wherein he confirmed that he sold and delivered the glass beads to M/s M.M. Exports and M/s Ramapati Exports. A copy of the above said affidavit is also been furnished. The relevant portion appearing at point 5 of page 2 of the affidavit is reproduced as under:- 'I say that the said glass beads were received by me in small lots on diverse dates and I sold delivered the same to the said M/s M.M. exports, Calcutta and M/s. Ramapati Exports at their respective offices at Calcutta through my said peon.' The said Mr. Sarswat has also furnished a reply dt 26.02.03 to the Commissioner of Customs (Port), Kolkata wherein he confirmed that he sold the glass beads to M/s. M.M. Exports at Rs. 6,750/- per kg. The relevant extract appearing at point 4 & of page 1 & 2 of the above said reply is reproduced here as under:- '4. I came into contract with Shri L.K. Todi of M/s M.M. Export, who wanted to buy Glass Beads from me. I entered into an agreement with him to sell Glass Beds at local level & Rs. 6,750- per kg. The Glass beads were hand cut and hand polished. 5. Between April, 1999 and May 1999, I sold and delivered 19260 Kg and 25000 Dozen of hand cut Glass ....
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....sad Mahavir Prasad. However the AO has not challenged the sale claimed by the assessee. The ld. AR produced the copy of the purchase bills from the above said party which are placed on pages 144 to 161 of the paper book. There was also an agreement between the assessee and the party for the sale purchase of glass beads and fire polished glass chatons which is placed at page 162 of the paper book. The assessee has made the payment of all the purchase bills through account payee cheque. Our attention was also drawn on page 30 to 33 of the custom report to demonstrate that no over valuation of the exports was made to earn extra DEPB and the name of the assessee was not there in the list those who claimed the extra DEPB. . Finally the AR prayed for allowance of the purchase expenses. 4.1 From the aforesaid discussion we find that the assessee has made total purchase of the goods for an amount of Rs. 13,07,95,500.00 from M/s Madho Prasad Mahavir Prasad. Out of the total purchase the AO has disallowed the purchase expenses worth of Rs. 12,84,94,000.00 on the information gathered from the custom department that the assessee has overpriced the value of the export goods. However the CIT(A)....
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....uding ledger extract of the party appearing in the app's books of account. iii) I have perused the documents which were produced before the AO including Form No. 42A given by the Sales Tax Authorities. I find there is a force in the argument of the Ld. AR that the appellant filed all the relevant details including the address of M/s Manohar Lal Mahabir Prasad. The AO as not conducted any enquiries either during the assessment proceedings or at the remand report stage. In fact M/s Manoharlal Mahabir Prasad is the sister concern of the appellant firm. The AO should have cross verified the return of income filed by this party. iv). As the AO failed to produce any cogent and corroborative evidence to establish the bogus nature of the above purchase, I direct the A.O to delete this addition of Rs. 20,000/-" 8. We have heard both the parties and perused the materials available on record. Before us the ld. AR submitted that the goods were purchased from the said party vide invoice no. MMP/NT/176 dated 25.6.1999 for Rs. 20,000/-. This transaction of purchase was interstate purchase so the form 42A was duly submitted to the Sales Tax Department. 9. We find from the aforesaid discuss....
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....uiries to ascertain the genuineness of transactions as the present postal address and payment details available. iv. In my view, the appellant which failed to produce the relevant details during assessment proceedings, furnished the required details at the remand report stage, thus discharging its onus of responsibility. It is for the department to prove the genuineness or otherwise of the transactions when once the basic facts are available. However the AO failed to get enquiries done and bring on record any material evidence contrary to the claim of the appellant. In these circumstances, the addition made on account of unproven genuineness of transactions is not reasonable and deserves to be deleted. Accordingly, I direct the AO to delete the addition of Rs. 3,15,117/- made towards purchase." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us : 13. Before us the ld. AR submitted that all the payments for purchases were made through account payee cheque. The ld. AR produced the copy of the ledger of the party which is placed at page 178 of the paper book. The ld. AR also submitted that all the requisite details were submitted such as copies of invoice, l....
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....ve imported the goods. Secondly the cost of that particular kind of silk might be comparatively less which made the appellant to import the goods. On the other hand the AO should have verified these aspects from different sources including Customs Authorities and other government agencies (Commerce Ministry etc.) to ascertain the real value of the goods import if comparative market rate was not available. He should have examined the aspect of the utility of the goods and subsequent sale to ascertain its consumption and price. The Assessing Officer has not made any efforts either to prove the imports are wrong or to bring any cogent material evidence to show that the appellant resorted to over invoicing imported purchases. In view of the matter I am of the opinion that the addition made on account of cost deserved to be deleted. Therefore, I direct the AO to delete this addition of Rs. 37,27,578/- made towards purchase of silk." 18. Before us the ld. AR submitted that this is an import transaction and all the relevant documents such as all the 4 invoices of the party, Bill of entry of each import (4 Nos.), Bank certificate for the remittance of payment before the AO at the time of ....
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....duced. The notice u/s. 133(6) was issued after a gap of more than seven years as such there would have been a change in the address. In respect of M/s RGS Apparels it has been submitted that since the notice was given after a gap of seven years there would have been a change in the address and that the amount in question was subsequently paid by way of account payee cheque during the F.Y 2003-04. To this extent the copies of the ledger accounts were furnished. iii. In the case of M/s. ABN Laminators P. Ltd., the appellant furnished the current postal addresses of the company and residential addresses of a director of the company along with income tax details of the company. However the AO has not conducted any enquiries based on the information given by the appellant. He should have enquired into the matter as the present whereabouts of the company has brought to the knowledge of the AO. The cessation or remission of liability depends on the factual position. Either the appellant company suo motu write off in its books or based on the confirmation given by the sundry creditors the cessation of the liability comes into picture. In this case there is neither remission nor cessation ....
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....ces amounting to Rs. 22,250/- money receipt also enclosed and the AO has not caused any enquiries in this regard. As regards miscellaneous freight bills the appellant furnished only freight account without any supporting evidences. iii. It is not correct on the part of the appellant to say that the AO has not conducted any enquiries. It is the responsibility and onus trusted on the appellant to produce the necessary evidences. It only produced evidence to the extent of Rs. 23,500/- by way of producing 1 copies of invoices. As such for the remaining amount of Rs. 28,796/- no documentary evidence whatsoever produced by the appellant. Accordingly I direct the AO to restrict the addition to Rs. 28,796/- out of total disallowance of Rs. 52,046/-. As regards miscellaneous freight bills the appellant failed to produce any supporting evidence to justify the expenditure of Rs. 38,235/-. However taking into consideration the turnover of the company and circumstances, I direct the AO to disallow 20% of Rs. 38,235/- which in my opinion is reasonable enough to take care of any inflation in freight bills. This is because the Ld. AR brought to my notice that all these miscellaneous freight bills....
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....he conditions mentioned in the 3rd proviso to section 80HHC are very much fulfilled. Accordingly the ld.CIT(A) after considering the assessee submission and remand report of the AO concluded that the deduction is available to the assessee by observing as under :- "i. I have perused the provisions of Section 80HHC of I.T Act and also Export & Import Policy (1997-2002) and the contentions raised by the appellant as against the disallowance of claim on account of profit on sale of DEPB License u/s. 80HHC(3) of proviso (a) & (b). ii. The two conditions laid down u/s. 80HHC(3) with regard to the claim of 90% of sale proceeds of DEPB License are: i) The assessee should have an export turnover exceeding Rs. 10 crores during the previous year. ii) The assessee should have necessary and sufficient evidence to prove that: (a) He had an option to choose either the duty draw back or DEPB scheme ; and (b) The rate of draw back credit attributable to the Customs duty was higher than the rate of credit allowable under DEPB scheme. "As contended by the appellant the two main conditions prescribed u/s. 80HHC(3) have been fulfilled by the appellant and accordingly the appellant is eligible to....
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.... previous year, the profits computed under clause (a) or clause (b) or clause (c) of this sub-section or after giving effect to the first proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiid) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee, if the assessee has necessary and sufficient evidence to prove that,- (a) He had an option to choose either the duty drawback or the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme; and (b) The rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme:" Now to avail the benefit under section 80HHC for the profit arising from the sale of the DEBT license the above said twin conditions needs to be satisfied. We accordingly find from the submission of the assessee that both the conditions have been fulfilled as provided in (a) and (b) of third proviso to section 80HHC of the Act. The relevant Policy of the DEPB in terms of paragraph 7.14 of ....