TaxTMI 
TaxTMI 
2017 (11) TMI 367
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....k of account of your appellant by invoking provision of section 145 (3) ofITAct,1961 4) The Commissioner of Income- tax ( Appeals) 18. Mumbai failed to appreciate that the learned assessing officer has not allowed expenditure legitimate to the business shown in profit & loss account of your appellant amounts to Rs. 46,96,195/-. 5) The learned assessing officer has wrongly charged interest U/s. 234 B of the Income- tax Act. 1961 6) Your appellant reserves the right to add, amend delete or alter any or all the above ground of appeal each of which without prejudice to the order." 3. The assessee has also moved additional ground of appeal, which reads as under:- "1. The Id. CIT(A) erred in confirming the estimate of profit @ 1% made by the Assessing Officer without appreciating that in providing accommodation, the Appellant had charged commission of 0.1% on the turnover as per director's statement recorded and further as the issue is decided in Appellant's group concern case before ITAT, the same suit may be followed. 2. The Appellant craves leave to add, alter or amend all or any of the above Grounds of Appeal." 4. Brief facts....
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.... Profit before tax 0.17 0.14 0.13 0.13 Sundry Creditors 46.95 95.90 178.32 101.64 Sundry Debtors 28.03 50.38 111.94 0.68 (ii) On perusal of the above details, it is seen that in all these years, in spite of showing a huge purchase and sales transaction, a meager profit has been shown as income even after taking into consideration other receipts like interest income. (iii) Although the turnover over the year had oscillated from 50 crores to 275 crores, a small variation has been shown in the profit offered for the corresponding year which is in the range of Rs. 13 lakhs to Rs. 17 lakhs. (iv) It is seen that in all these years, after excluding interest income and other receipts, the assessee has actually shown losses from trading activity. (v) For carrying out activity on such a large scale, very few expenses have been shown in the return of income filed over the years. (vi) Although during the assessment year under consideration the assessee company had claimed to effected purchases to the tune of Rs. 290 crores and had shown sales to the tune of Rs. 275 crores, expenses towards transp....
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....ies had claimed that they had entered into bag to bag transaction and had not taken delivery of goods in most of the cases. In the notice u/s 142(1), the A.O. has asked the assessee to furnish item-wise entry of opening and closing stock with quantity and value of goods. In response to this, the assessee has submitted the details of opening and closing stock, the chart of which is given at page 5 of the assessment order. From the perusal of the details of opening and closing stock the A.O. has observed that the details given by the appellant are very vague, the specific information called for like type, variety, brand name, their gauges etc. were not provided which shows that the assessee company has not properly maintained quantitative details of the commodities claimed to have been purchased and sold goods to the entities registered under VAT and issued and received purchase/sale invoices made as per the sale of goods. But, the A.O. has not accepted the sale/purchase of goods as genuine because no evidence has been filed for the purchase/sale of goods and also not confirmed by a single party that any sale/purchase has been made with the assessee company. Thus, the A.O. has held t....
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....ies. The A.O. has given the copy of the statement to the appellant and asked to explain as to why these transactions shown in the books of account should not be treated as sham/non-genuine transactions. In response to the show-cause notice, the AR of the appellant has submitted its reply which is reproduced at page 2 - 3 of the assessment order. The A.O. has also issued notice u/s 133(6) of the IT. Act to various parties with whom the assessee has claimed to have made sales/purchase transactions. In these notices, the A.O. has specifically asked to furnish transport receipts, warehouse receipts, delivery challans etc. But, none of the party has confirmed that any sales/purchase transactions has been carried out with the assessee company nor submitted any transport receipt, warehouse receipt and delivery challans as called for. This fact was also confronted to the assessee company. The A.O. has also issued notice u/s 142(1) and called for a specific detail of opening stock, closing stock with quantity and value of the goods. In response to this show-cause notice, the assessee company has given a very vague reply not mentioning the details as called for i.e. brand name, type of goods....
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....er Sec. 14 of Maharashtra Value Added Tax Act, 2002. In the statement, he has specifically stated that no actual sale/purchase activity has been carried out by the assessee company and its group concerns, but, it was only the book entries. The A.O. has given reasonable opportunity to the assessee to explain these facts and file the evidence to prove the genuineness of sale/purchases. The A.O. has also issued notice u/s 133(6) to the parties with whom the assessee has made sales/purchases and specifically asked to file copies of transport receipts, warehouse receipts and delivery challans. In response to the notice u/s 133(6), neither the assessee company nor any other party with whom the sale/purchases have been made has submitted any documentary evidence in the shape of transport receipts, warehouse receipts and delivery challans to prove the genuineness of sale/purchases. The A.O. has specifically asked the assessee to submit complete quantitative details with opening and closing stock of goods purchased and sold. The assessee could not submit the specific details as called for, but, only given a vague reply. It is well settled established fact that to prove the genuineness of sa....
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....mpleted the assessment after due inquiry and passed the assessment order u/s 144 of the I.T. Act. (3) The A.O. has wrongly rejected book of account of your appellant by invoking provisions of Sec. 145(3) of the I.T. Act. 3. From the perusal of the assessment order, it is found that the A.O. has passed order u/s 144 and also rejected the books of account of the assessee u/s 145(3) of the I.T. Act. During the assessment proceedings, the A.O. has given a number of opportunities to the assessee and asked to submit specific details which the assessee has failed to file. Similarly, the A.O. has asked the assessee to submit quantitative details showing the opening stock and the closing stock of the goods sold and purchasedin a specific proforma which the assessee has also failed to submit. Thus, the A.O. has passed order u/s 144 and also rejected the books of account u/s 145(3) of the I.T. Act. 3.1. Before me, the appellant has submitted as underlie A.O. rejected the books of appellant by invoking sec. 145(3) of the I.T. Act on the following grounds to passing the order u/s 144 of the I. T. Act:- (i) Whether the assessee has regularly employed a method ....
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....ant has submitted that the assessee has regularly employed a method of accounting and there is no change in the year under consideration. It was also submitted that the assessee has maintained complete books of account and stock register, therefore, the A.O. is not justified in rejecting the books of account. Since the details have been filed before the A.O., therefore, the A.O. is not right in passing the order u/s 144 of the I.T. Act. From the perusal of the submissions and facts of the case, it is clear that the assessee was given a reasonable opportunity to file complete details with documentary evidences to prove the genuineness of purchase/sales, but, no documentary evidence was filed, only general written submissions made along with copy of sales/purchase invoices and payment made through banking channel. The specific requirement to prove the genuineness of purchases that the assessee was asked to submit like transport receipts, warehouse receipts, delivery challans etc. but, these were never submitted before the A.O. nor by any party to whom notice u/s 133(6) were issued had submitted this specific details, therefore, the order passed by the A.O. u/s 144 is upheld.....
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.....O. has held that the assessee has not made any actual sale/purchase of goods, but, only taken book entries. Therefore, the A.O. has estimated the income @ 1% of the total turnover of sales/purchases and also held that since no sales/purchases have been made by the assessee, therefore, the expenses claimed are not allowable. 4.2. Before me, the appellant has submitted as under- Your appellant has incurred administration and other expenses towards business amounts to Rs. 46,96,195/- which are legitimate and in normal course of business are to be allowed before calculating the total income of your appellant. 4.3. I have considered the submissions of the appellant, order of the ; A.O and facts of the case carefully, it is noticed that in the assessment order, the A.O. has held that the assessee has not made any actual sale/purchase as claimed in the return of income, but, has only taken book entries. Therefore, the A.O. has estimated the income of the appellant company @ 1% of the total sales/purchases by taking care of the expenses debited to the profit & loss account. On the other hand, the AR of the appellant has submitted that the administrative....
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....ipt and delivery challans as sought for. No quantitative detail of sales and purchase has been provided by the assessee. These facts make it amply clear that the assessee is engaging into bogus activities. In these circumstances, Assessing Officer has rejected the books of account and considered 1% commission on purchase / sales made with outside parties as assessee's income. The facts enumerated above clearly indicate that assessee is entry operator and showing fictitious purchase and sales. In the absence of any response from the assessee's so called purchasers and sellers and in the absence of any quantitative details, we are of the considered opinion that there is no infirmity in the rejection of books. 9. As regards the issue of reasonable opportunity, we find that the learned CIT(A) is right in holding that the assessee has been given adequate opportunity. 10. As regards allowability of expenditure claimed by the assessee, we find that since the assessee's entire activity has been found to be dealing in bogus entry operation, learned CIT(A) has rightly held that in such situation there is no question of allowing administrative and other expenditure. 11. Now we come t....