TaxTMI 
TaxTMI 
2010 (11) TMI 1029
X X X X Extracts X X X X
X X X X Extracts X X X X
....e addition made by the AO on account of disallowance of ₹ 7,40,148/- being 25% of the total purchases. (2) On the facts and in the circumstances of the case and in law, the ld. CIT(A) IV, Surat ought to have upheld the order of the AO, in all respect. 3. The facts of the case are that the assessee firm is engaged in the purchase of polished diamonds and their export. During the course of assessment proceedings the AO noticed that assessee has made following purchases :- 1. M/s Shraddha Enterprise, Prop. Dhirajlal Koradiaya Rs.15,61,235/- 2. M/s Jinay Impex, Prop. Shri Navinchandra Koradiya Rs.5,23,953/- 3. M/s Swet Diamond, Prop. Dhirajlal Koradiya-HUF Rs.8,75,404/- Rs.29,60,592/- During the course of assessment proceedings....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade any sales to the assessee. According to the ld. DR, the three parties are adopting same modus operandi then it cannot be said that same modus operandi is not adopted in the case of the assessee. Therefore, the AO was justified in invoking the decision of the Tribunal in Vijay Proteins Ltd. vs. ACIT (supra). 6. On the other hand, the ld. AR submitted that the decision in the case of Vijay Proteins Ltd. vs. ACIT (supra) can be applied only when purchases are made in cash and the parties are not traceable, but in the present case payments to those parties have been made by account payee cheques and those parties are available as the department has recorded their statements. Since according to the ld. AR the department is alleging that par....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lar modus operandi might also have been adopted in respect of sales made to the assessee. But the addition to total income cannot be made merely on the basis of suspicion howsoever strong it may be. There is no specific mention in the statement given by the three parties that sales made to the assessee are also bogus and only accommodation bills are issued to the assessee. Thereafter the assessee should have been given an opportunity to cross examine the three parties. Even though the three parties from whom the assessee has claimed to have made purchases, would be assessee's witness but so long as assessee has discharged the primary onus of showing the purchase bills, payment through account payee cheques and availability of purchase mater....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of convenience we reproduce the relevant para from the decision in the case of Vijay Proteins Ltd. vs. ACIT (supra) as under :- "19.3 It is well known that if purchases are made from open market without insisting for the genuine bills, the suppliers may be willing to sell those products at a much lower rate as compared to the rate which they may charge in case the dealer has to give a genuine sale invoice in respect of that sale and supply the goods. There may be various factors due to which there is bound to be a substantial difference between the purchase price of unaccounted material and rate of purchase of accounted for goods. There may be a saving on account of sales tax and other taxes and duties which may be leviable in respect o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... year. Accordingly, we confirm the order of ld. CIT(A) and dismiss the appeal filed by the Revenue. ITA No.4098/Ahd/2007 10. This appeal filed by the Revenue is against cancellation of penalty under section 271(1)(c) of ₹ 8,16,009/-. The grounds raised by the Revenue are as under :- (1) On the facts and in the circumstances of the case and in law, the ld. CIT(A)-IV, Surat has erred in deleting the penalty levied by the AO u/s 271(1)(c) of the Act for ₹ 8,16,009/- (2) On the facts and in the circumstances of the case and in law, the ld. CIT(A) IV, Surat ought to have uphold the order of the AO, in all respects. 11. The AO levied the penalty under section 271(1)(c) in respect of addition of ₹ 7,40,148/-. He levied pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ditional evidence led by the assessee. On further appeal, the Tribunal upheld the plea of the assessee in respect of amount received from S but dismissed the appeal of the Revenue in respect of deletions in respect of lease rent and depreciation allowance. The Tribunal cancelled the penalty levied under section 271(1)(c) of the Income-tax Act, 1961. On appeal to the High Court: Held, dismissing the appeal, that as regards the deletion by the Commissioner (Appeals) after referring to the additional evidence led before him, the Tribunal had examined the matter and recorded that a remand report was duly sought and thus no prejudice was caused by considering the additional evidence. With regard to the amount received from S the matter was in t....