TaxTMI 
TaxTMI 
2017 (11) TMI 498
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....ious additions. One of the additions made by the Assessing Officer relates to addition u/s 69C of the I.T.Act, 1961 at Rs. 17,22,132/-, for which the assessee is an appeal before us. 3. The assessee has raised the following grounds of appeal: "1. For that the order of the Ld. CIT(A) is arbitrary and bad in law and on facts. 2. For that the Ld. CIT(A) is bad in law in making the addition of Rs. 17,22,132/- u/s 69C of the Income-tax Act, 1961." 3.1 The brief facts qua the assessee are that the assessee purchased total amount of goods from M/s. Paradeep Phosphates Ltd. to the tune of Rs. 1,88,62,363.56/- but he has shown in his accounts the purchase figure from M/s. Paradeep Phosphates Ltd at Rs. 1,71,40,231/-. Thus he has under shown the purchase to the tune of Rs. 17,22,132/- which tallies quantity wise and value wise the said transaction relating to the period from 04.2.2008 to 31.03.2008. It is also revealed from the record that the said transactions not only has been kept outside of the purchase register it was found to be not recorded in the stock register and party ledger as it is found to a credit purchase as reflected in the supplier's books duly admitted by the assessee.....
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....ed within the known sources of the assessee, is a fact that has to be established, therefore, the onus for establishing this lies with the assessee and not upon the Assessing Officer. Therefore, the Ld. CIT(A) held that the assessee has not been able to discharge his onus with respect to these transactions therefore, he has not been able to create a cause for interference with the order of the Assessing Officer and therefore, the Ld. CIT(A) dismissed the appeal of the assessee. 3.2. The Ld. Counsel for the assessee has submitted before us that the assessee has made a total purchase of Rs. 1,88,62,363/- from Paradeep Phosphates Limited (hereinafter referred to as 'PPL') during the financial year ended 31 March, 2008. However in the books of accounts of the assessee purchases amounting to INR 1,71,40,231/- is reflected. The above difference of INR 17,22,132/- is on account of non recording of transactions relating to purchase made from PPL during the period from 4the February, 2008 to 31st March, 2008. In the original assessment order u/s 143(3) dated 22.10.2010 (Page No 20-26). The AO erred in mentioning that the source of the above expenditure (i.e. unrecorded purchase of....
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....er it back to the AO. However the assessee. being a small businessman based in a small town of Burdwan, didn't prefer an appeal against the same in the anticipation that the subsequent proceeding on the direction of the Ld. CIT(A), with the AO will result in correct assessment. Thus on the basis of the above direction the Assessing Officer called on the Assessee to substantiate that the payments are from disclosed sources. The Assessee in his reply submitted that all the payments were from regular bank accounts and the source of the payment was the sale proceeds of these unaccounted purchases only. The sale proceeds being received in cash has been routed through the regular bank account of the Assessee and used to pay for the purchases. In spite of the above the Assessing Officer, while passing the subsequent order u/s 143(3)/251 dated 04.01.2013 (Page No 64-66), retained the entire addition of Rs. 17,22,132/- made u/s. 69C of the Income Tax Act 1961 as per the original assessment order passed u/s 143(3) dated 22.10.2010. Being aggrieved by the order dated 04.01.2013 the assessee once again preferred an appeal with the Ld. CIT (A), Burdwan. Moreover in Page No. 2 of the subseq....
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....ed in isolation without considering the related sales. A logical conclusion would have been to consider the gross profit made on the transactions as a whole. However the Ld. CIT (A) dismissed the appeal vide its order dated 29.11.2016 in an arbitral manner without even appreciating the materials on record. The Ld. CIT (A) while disposing the matter has stated the following in the order- "The appellant is trying to suggest a scheme, as per which he has indulged in sales and purchases in cash - prohibited by law - while keeping the entire transaction out of the bank and ensuring that there is no corroboration of these transactions. If the appellant states that the transactions of sales and purchases are related in that, the cash obtained from one was used in the other, then he has also to show a nexus between the two transactions as well as point out the circumstances in which these cash transactions took place. That is, the sale and purchase, both, taking place in cash something that would automatically be struck by section 40A(3)" To this it would be appropriate to reiterate the fact that the transaction for purchase from PPL were never made in cash and thus in no manner whatso....
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.... the unrecorded purchases as the GP on this unrecorded purchase has already been taxed in the original scrutiny assessment order u/s 143(3). We are of the view that the Ld. CIT(A) in his order dated 29th November, 2016 has failed to appreciate the documents submitted by the assessee and the same is evident from the order where the Ld. CIT(A) has not even discussed the various materials like cash summery, stock register, sales bill etc. These materials were produced along with paper book during the course of proceedings before the Ld. CIT(A). At this juncture it is worthwhile to quote Section 69C of the Income-tax Act, 1961: "Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure of part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactorily, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of th....