TaxTMI 
TaxTMI 
2015 (6) TMI 1094
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....per first proviso to section 153(l)(a) on the ground that the assessment was completed within twenty one months i.e. before 31-12-2009. 2. The Id CIT(A) has erred in confirming the addition of Rs. 1,04,16,233/- as bogus purchases from the following five parties as per Para 6 to 11 of the appeal order on the finding that the appellant has not discharged the onus of proving the purchases by furnishing half baked, unreliable, unverifiable papers in support:- (1) Jolex Traders Rs. 24,94,120/- (2) Umiya Steel Traders Rs. 19,69,268/- (3) Rushi Enterprise Rs. 22,32,310/- (4) Maruti Traders Rs. 17,41,950/- (5) Mahakali Steel Corporation Rs. 19,78,585/- Total Rs. 1,04,16,233/- 2.1 The appellant submits that the Id C1T(A) has erred in not appreciating objectively the grounds of appeal, and written submissions, evidences and citations filed with Id CIT(A) wherein the appellant had explained that he had discharged the onus of proving the genuineness of purchases. 3. The Id C1T(A) has erred in ignoring the specific grounds of appeal Nos. (XI) to (XIII) of 2.3. and ground No.2.4 which reflect the trading result after additi....
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.... 10.34% on the receipts of Rs. 1,86,50,000/- as noted by him in Para 3 of his order. He submitted that gross receipts from construction business of Rs. 1,86,50,000/- declaring net profit of Rs. 8,97,380/- which works out to 8.49% as against 8% net profit on receipts as per section 44AD applicable to construction business. In addition the assessee submits that the addition of alleged bogus purchases of Rs. 1,04,16,233/- will result in net profit at 64% which is not real. He further submitted that the GP works out to 10.34% i.e. of Rs. 19,29,239/- on the receipts of Rs. 1,86,50,000/- as noted by the AO. If the alleged bogus purchases of Rs. 1,04,16,233/- are added to GP, the GP will work out to 66% which does not reflect the real ratio of GP in construction business. 3.4. On the contrary, the ld.Sr.DR supported the orders of the authorities below and submitted that the AO made addition on the basis that the assessee failed to establish the purchases from the concerned parties with corroborative evidences in spite of various opportunities given to the assessee. He submitted that the AO has also observed that the assessee has not maintained any corroborative details regarding purcha....
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....tstanding amount to these creditors till date, however, nobody can wait for such huge amount for long period. (xiii) During the year the partners have withdrawn their capital without settle the accounts of creditors because they know that the creditors are bogus. (xiv) The assessee has completed the project during the year under consideration and the assessee has sufficient fund to pay the creditors but did not pay the same which prove that the creditors are bogus. (xv) The assessee also failed to furnish the details of so called goods purchased from these parties. 4.12. The onus is totally on the assessee to prove that any expenditure incurred by it was wholly and exclusively for the purpose of business. In the present case, the assessee has failed to produce the alleged creditors and the existence of these suppliers is very much in doubt. In fact no evidence whatsoever kind has been furnished by the assessee to discharge the onus that lies on it. However, instead of bringing any material evidence on record, the assessee merely made the contentions as quoted above. The assessee has also relied on the decision in the case of Vijay Proteins. Howev....
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....4.1. The contention of the assessee is that it has discharged primary onus by furnishing the details to the AO, therefore the AO was not justified in making the addition. We find that the undisputed fact is that the assessee has claimed purchases from following five parties:- 1. Jotex Traders Rs.24,94,120/- 2. Umiya Steel Traders Rs.19,69,268/- 3. Rushi Enterprise Rs.22,32,310/- 4. Maruti Traders Rs.17,41,950/- 5. Mahakali Steel Corporation Rs.19,78,585/- The total purchases made from these parties is amounting to Rs. 1,04,16,233/-. The AO observed that the assessee did not maintain quantitative details regarding purchases and consumption of various items used for construction. The AO has also observed that in respect of Jolex Traders, the summon issued u/s.133(6) of the Act was returned by the postal authorities with remarks "left". The assessee could not furnish correct/changed address of the party or could not produce the party before the AO. Similarly, in the case of Umiya Steel Traders, summon was issued u/s.133(6) of the Act on 11/09/2009 which was returned by the postal authorities with remarks "left". In the case of Rushi Enterpris....
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....d u/s.234-C of the Act. This ground being consequential is held accordingly. As a result, assessee's quantum appeal in ITA No.3348/Ahd/2010 for AY 2007-08 is dismissed. 8. Now, coming to the penalty appeal, i.e. ITA No.1170/Ahd/2014 for AY 2007-08. The assessee has raised the following grounds of appeal:- 1. The CIT(Appeals) erred in upholding the levy of penalty u/s.271(1)(c) of Rs. 35,96,103/-. 2. The CIT(Appeals) failed to appreciate the submissions made before him and in the process erred in upholding the penalty u/s.271(1)(c). The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing. 8.1. Brief facts of the case are that the AO while framing the assessment vide order dated 24/12/2009 made disallowance of Rs. 1,04,16,233/- on account of bogus purchases and initiated penalty proceedings. Subsequently, AO levied a penalty of Rs. 35,06,103/- u/s.271(1)(c) of the Act. Against the said assessment order, assessee filed an appeal before the ld.CIT(A), who after considering the submissions, dismissed the appeal. Now, the assessee is further in appeal before this Tribuna....
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....ar's income only and not against preceding year's income. 5.15. It is noticed that the AO has levied the penalty for concealment of income by way of furnishing of inaccurate particulars of income which is very much apparent from the records. It is also mentioned that as per sub-section (1B) of 271(1) which was inserted by Finance Act, 2008 with retrospect effect from 1.4.1989, if an order of assessment contains direction for initiating of penalty proceedings under clause (c) of Sub-section (1) then such an order of assessment shall be deemed to constitute satisfaction of AO for initiation of penalty. In the present case, such directions have been given by the AO in the penalty order and there is no default on this count." 9.1. We find that the assessee has placed on record letter(s) dated 22/12/2009 addressed to ITO with account of Rushi Enterprises with enclosures, letter dated 12/09/2009 addressed to ITO from Jolex Traders with enclosures, letter dated 21/11/2009 addressed to ITO from Umiya Steel Traders with enclosures, letter dated 167/11/2009 addressed to ITO from Maruti Traders with enclosures and letter dated 21/11/2009 addressed to ITO from Mahakali Steel Corpor....
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....penditure and not finding of concealment of any particulars or mala fide intention to reduce the taxable income. The Hon'ble Gujarat High Court in the case of National Textiles v. CIT [2001] 249 ITR 125/114 Taxman 203 has held that provisions of section 68 permits the AO to treat unexplained cash credits as income for making certain additions if there is failure by the assessee to give an explanation. However, the addition made on this count automatically cannot justify the penalty levied u/s 271(1)(c). Hon'ble High Court further held that for levy of penalty u/s 271(1)(c) two factors must co-exist (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee's income. It is not enough for the purpose of penalty that the amount has been assessed as income and (ii) the circumstances must show that there was animus, i.e. conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. Explanation 1 to section 271(1)(c) has no bearing on factor no.1 but has a bearing only on factor no.2. The explanation does not make the assessment order conclusive evidence that the amount ....