TaxTMI 
TaxTMI 
2017 (11) TMI 1282
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....) for the assessment year 2007-08 vide order dated 31-03-2015 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). 2. The only common issue raised by assessee and Revenue in these cross appeals is as regards to the order of CIT(A), restricting the addition at Rs. 2,96,65,590/- by applying peak credit to the alleged bogus purchase of Rs. 7,10,73,950/-, which was added by the AO by adopting the peak credit at Rs. 5,46,03,927/-. For this assessee has raised following two grounds: - "1. On the facts and circumstances of the case as well as in law, the learned CIT(A) has erred in confirming the addition of Rs. 2,96,65,590/- on account of alleged bogus purchase, on the basis of peak theory considering 45 days credi....
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....AO under section 143(3) on 30-11-2009 assessing declared income. Subsequently, the AO received information from DGIT investigation, Mumbai vide letter dated 18-03-2014, who in turn has received information from Sales Tax Department of Maharashtra that there are certain brokers, who are providing accommodation bills/ entries without selling anything. Assessee is one of the beneficiaries and he has obtained bogus bills from the following parties: - Name of the party Amount (Rs.) Harshit Impex 1,33,66,010/- Krishna Diamonds 1,16,61,626/- Mihir Diamonds 49,17,250/- Sanyam Diamonds 1,12,73,450/- Shri Ram Diamonds 2,78,79,244/- Simran Gems 19,76,370/- Total 7,10,73,950/- 4. According to informati....
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....ng in Para 6.1 as under: - "6.1 I have considered the contentions of the AO and that of the appellant. The claim of the appellant that it enjoyed credit limit, between 45 days to 180 days was considered. Because of the very nature of the transaction, it is not possible for the appellant to produce any evidence in respect of the actual credit limit availed in respect of various purchases. Taking that aspect into consideration, I consider that it would be reasonable to presume that the appellant had a credit limit of 45 days in respect of the purchases for which payments were made in cash Though in his letter dated 21.03.2017, the AO claimed that the payments for the purchase of the goods were made at the time of purchase itself with....
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....3) is not supported by any evidence. Aggrieved, against the order of CIT(A), the Revenue has challenged restriction of the peak addition as well as not made any addition under section 40A(3) of the Act. On the other hand, the assessee has challenged the peak addition retained by CIT(A). 7. Before us, the learned Counsel for the assessee first of all stated that there cannot be any addition on peak credit for the reason that the entire payments are by account payee cheque to these parties. He referred to pages 14 to 51 of assessee's paper book, wherein, complete details of payment to these parties is made by account payee cheque and recorded in the books of account. We have gone through these details and when confronted to the learned ....
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....rgued that a peak should be estimated but she could not elaborate how peak can be added if, the payment is made by cheque and the entries are accounted for. In view of these arguments, the learned Senior Departmental Representative, only requested for sustaining the order of the Assessing Officer. 9. We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that the assessee had obtained bogus bills from various hawala parties but payments are made by account payee cheques and recorded in the books of account. It means that the payments are accounted for and not unaccounted. The assessee to avail the benefit of VAT and to obtain other benefits like lower market price ....