TaxTMI 
TaxTMI 
TaxTMI 
2007 (7) TMI 647
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....arties. 3. The relevant facts are that during the year under consideration the assessee had exported gems and jewellery and material were claimed to have been purchased from M/s Adinath Traders, M/s Om Shree Jewellers, M/s Ambika Impex and M/s M.D. Exports. The AO doubted the purchases made from the claimed four parties since in her view the said four parties had only issued accommodation bills without physical delivery of the goods. She accordingly made addition of Rs. 15,19,724 under s. 69C of the Act and consequent to that the expenditure equal to purchase was considered non-genuine and Rs. 15,19,724 were also disallowed in view of proviso to s. 69C of the Act. The AO also denied the claim of export and deduction under s. 80HHC on the claimed profit stated to have been earned from the export of the goods purchased from the abovenamed four parties. The sales credited in the books of account in respect of export consignment were treated as unexplained and added under s. 68 of the Act. The learned CIT(A) has upheld the assessment sustaining addition of Rs. 15,19,724 under s. 69C and addition of the same amount under proviso to s. 69C of the Act. These additions have been questione....
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.... AO even did not consider that the purity of silver in pendant which was just 50 per cent, called white metal in export sale, and, therefore, these were purchased at low rates, the nature of payment was as per the prevailing practice in the market so also the understanding in between the buyer and the seller. The assessee could not be blamed for the inability of the supplier to produce the vouchers for the manufacturing of silver pendant though the genuineness of sale of goods by these sellers was doubted by the AO but no enquiry whatsoever was made from any of the sellers for their past and present purchases nor their bank accounts were checked by the AO to know the position of payment made by the assessee through account payee cheques nor the AO had proved the return of cash to the assessee by the sellers to whom payments were made by account payee cheques for the purchases. 6. The AO without making any comments on the export of goods by the assessee which involved customs clearance, receipt of sale consideration in convertible foreign exchange through banking channel for which the assessee was allowed the deduction under s. 80HHC of the Act, misinterpreting the facts of the cas....
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....his office at Ratnasagar, MSB Ka Rasta, Johari Bazar, Jaipur. Afterwards, the appellant had incurred telephone expenses of Rs. 10,305 in contacting the foreign buyer and for payments. There was no need of visiting foreign country. Had the partner visited foreign country, the taxable profit would have reduced. (v) Export of white metal pendents which are of silver : From the export invoice (paper book 25), the items exported containing silver were exported by the name white metal. The total purchases of pendent was of Rs. 6,367 containing less than 50 per cent purity of silver therefore silver rates for 999 tonch cannot be applied as alleged by the learned AO. (vi) High GP and NP rate : The quality of goods exported was short supply and rare. The assessee was in know of the suppliers and the importer therefore it took benefit of exporting the goods. If the GP or NP is high, the same has been disclosed by the assessee. Quantity tally was also submitted to the learned AO. The learned AO, in order to give colours of bogus purchases and export, has wrongly alleged that it was abnormal GP and NP. On the other hand, in the case of Shri Prakash Chand Vijay (ITA No. 26/Jp/2005 dt. 28th ....
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.... business of precious and semi-precious stones, the purchase and sale of same items are repeated generally when margin of profit is foreseen therefore there was no abnormality in such purchases. (e) The proprietor of M/s Adinath Traders, Shri Sanjay Kothari is not related to Shri Dwarka Prasad Vijay and keeping margin of profit by him in selling the goods to assessee firm is a clear proof that the transaction was genuine and actual. (3) M/s M.D. Exports : The purchases from M/s M.D. Exports have been held to be genuine in the cases of Prakash Chand Vijay vs. Dy. CIT (ITA No. 26/Jp/2005, dt. 28th July, 2006) and in the case of Vaibhav Gems Ltd. vs. Asstt. CIT (ITA Nos. 654/Jp/2004 and 33/Jp/2004), therefore no need to discuss it further. (4) M/s Om Shree Jewellers : In response to summons under s. 131, the manager Shri Ashok Kumar Agrawal attended and admitted having sold the goods. The total purchases from M/s Om Shree Jewellers was of Rs. 6,367 which was white metal pendants (containing less than 50 per cent silver) but the learned AO doubted the purchases because from total weight of 1,571.75 grams of pendent, the total sale price was Rs. 6,367 which was half of the current....
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....erefore, there is no need to comment on the wrong and misleading conclusion arrived at by the learned AO for Shri Dwarka Prasad Vijay and others (page Nos. 9 to 22). The learned Authorised Representative submitted further that from page No. 9 to page No. 21 of the order under s. 143(3) of IT Act, the learned AO had repeated the comments made by the learned AO (Dy. CIT, Circle-5, Jaipur) in case of Shri Prakash Chand Vijay (supra) on the working, bank account and other internal matters of suppliers like Manviya Exports, M/s M.D. Exports, M/s Payal Gems, M/s Ambika Impex, M/s Shikha Gems and M/s Prakash Gems out of which the assessee firm had dealings with M/s M.D. Exports and M/s Ambika Impex only. In this respect we submit as under : (i) Sellers being existing assessees and registered with Sales-tax Department : All the sellers are existing income-tax assessees and are registered with the Sales-tax Department. They are assessed to tax and confirmed having sold goods to the assessee firm. Following is the PAN of the suppliers : S. No. Name of seller of goods PAN 1. M/s M.D. Exports AAEFM9181C 2. M/s Ambika Impex* AHHPS3389N 3. M/s Adinath Traders* AFYPK7535H 4. M/....
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....ults were not rejected. It has been held by this Hon'ble Tribunal in the case of Asstt. CIT vs. Gem Stones (2001) 26 Tax World 511 (Jp) that addition for bogus purchases cannot be made without rejecting the account books. The learned Authorised Representative placed reliance on the following judgments/orders that the action of the learned AO was unjustified in treating the genuine purchases made by the assessee firm as bogus : (i) CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC); (ii) Dy. CIT vs. Adinath Industries (2001) 170 CTR (Guj) 262 : (2001) 252 ITR 476 (Guj); (iii) CIT vs. M.K. Brothers (1986) 52 CTR (Guj) 228 : (1987) 163 ITR 249 (Guj); (iv) Shiv Trading Co. vs. ITO (2003) 30 Tax World 117 (Jp); (v) Radha Mohan Agrawal vs. ITO (2003) 30 Tax World 190 (Jp); (vi) Asstt. CIT vs. Shri Krishan Malpani (supra); (vii) Om Metals & Minerals Ltd. vs. Jt. CIT (2004) 32 Tax World 55 (Jp); (viii) Sagar Mal Daga & Co. vs. ITO (2004) 32 Tax World 40 (Jp); (ix) Paras Mal Jain vs. Dy. CIT (2006) 36 Tax World 67 (Jp); (x) Prakash Chand Vijay vs. Dy. CIT (ITA No. 26/Jp/2005); (xi) Vaibhav Gems Ltd. vs. Asstt. CIT (ITA No. 654/Jp/2....
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....e said amount to the assessee against the bills issued by them which as per the AO is only accommodation bills. The AO has made detailed observations to justify the allegation made by her that the abovenamed four parties had not delivered the goods for the said amount of Rs. 15,19,724. The goods were actually not purchased from them. The assessee had claimed to have purchased stones/material worth Rs. 5,20,880 from M/s Ambika Impex, Rs. 6,41,326 from M/s Adinath Traders, Rs. 3,51,053 from M/s M.D. Exports and Rs. 6,367 from M/s Om Shree Jewellers. On the basis of information received and enquiry, conducted by her, the AO has tried to establish that the abovenamed four parties out of whom only M/s Adinath Traders and M/s Om Shree Jewellers appeared before the AO had only issued accommodation bills and goods were not purchased from them. Since goods were alleged to have been not purchased from the abovenamed parties, the AO has also denied the genuineness of export of the goods and has made addition under s. 68 of the Act on the amount credited in the books of account of the assessee in respect of export consignment. The AO has further made addition of Rs. 15,19,724 under the proviso....
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.... in the same business, the implication would be that goods have been purchased from others. Now, there are two possibilities in this regard. Firstly, some small suppliers who have no any regular establishment had actually supplied the goods to the assessee through the abovenamed four parties on payment of commission to them for utilizing their purchase bills having CST/RST numbers, PANs, address, etc. The other possibility is that those four parties to avoid payment of due tax have now denied the sale and that they had only issued bills without physical delivery of goods by charging commission only or they are not coming forward before the AO to disclose the truth. Undisputedly, it is not always within the control of a purchaser to produce the suppliers before the AO to establish the genuineness of claim of purchase. What is expected from a prudent purchaser to establish genuineness of claim of purchases is furnishing of purchase bill containing all the necessary details of the transaction, payment through banking channel, books of account, etc. In the present case before us, the assessee had furnished purchase bills issued by abovenamed four parties, their CST/RST numbers, PANs, p....
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....llowed. ITA No. 365/Jp/2005 : 14. The Revenue has questioned first appellate order deleting an addition of Rs. 34,35,390 made by the AO to the total income of the assessee on account of unexplained cash credit under s. 68 on account of non-genuine export. 15. The learned Departmental Representative placed reliance on the assessment order. The learned Authorised Representative on the other hand submitted that the AO had made addition under s. 68 of IT Act apparently on account of receipt of money in convertible foreign exchange through banking channel by treating it as unexplained income. The learned AO, without application of her mind had treated the export consideration received through banking channel as bogus whereas the source of foreign exchange is the export proceeds through banking channel for which the learned AO allowed deduction under s. 80HHC of IT Act amounting to Rs. 13,75,098 [refer p. 29 of order under s. 143(3)]. Similarly, on the basis of doubts, the purchases were also disallowed and added to the income of the assessee under s. 69C of IT Act by treating them as unexplained expenditure. The assessee had fulfilled all the four conditions of s. 80HHC of IT Act for....
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....submitted, the learned AO had allowed deduction under s. 80HHC of IT Act amounting to Rs. 13,75,098 as claimed by the appellant. The deduction under s. 80HHC can only be allowed when the export was made and proved to be genuine export in the eye of law. On the facts, allowing the deduction under s. 80HHC of the IT Act itself is sufficient proof for the export made for which the export receipt was entered in the books of accounts and therefore provisions of s. 68 of the IT Act cannot be applied by treating it as unexplained credit in the books of accounts. (iii) The learned AO had allowed the indirect cost incurred by the assessee in the export of the goods as claimed by the assessee in the P&L a/c and thereafter shown in the return of income but did not allow the direct cost of goods exported without which the goods could not have been exported for which deduction of Rs. 13,75,098 was allowed under s. 80HHC of IT Act. (iv) The goods exported by the assessee were verified and certified by the Central customs authorities. The allegation of the learned AO that export was bogus is just a doubt of the learned AO and on the basis of doubt the addition cannot be sustained under the ey....