TaxTMI 
TaxTMI 
2017 (12) TMI 1048
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.... of goods purchased from the parties and that the notices u/s (6) issued to the parties from whom alleged bills were received were returned undelivered by the postal authorities with the remark "not available at this address' and the assessee has also failed to produce the purchase parties before the AO. 2. On the facts and in the circumstances of the case and in law, the ld.CIT (A) erred in relying upon judgment in the case of CIT vs. Nikun Enterprises 373 ITR 619 and Saraswathi Oil Traders vs. CIT 254 ITR 259 (SC) without appreciating that the facts involved in the appellant's case are different from the facts of the above case laws. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition made on account of disallowance out of excess remuneration to Rs. 1,20,000/- as against addition made by the AO of Rs. 47,44,065/- without appreciating that the AO has rightly disallowed the excess remuneration partners's stipulated in section 40b(ii) of the IT Act. 4. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 37,34,907/- made u/s 41(1) of the IT Act....
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....cation. In compliance to it, the assessee vide its letter dated 24.03.2014 filed copy of the purchase bills, statement of account and bank transaction details. The assessee submitted before the AO that the said purchases were genuine and payments had been made to the parties through account payee cheques. However, the AO noted that the assessee failed to provide documentary evidence like copies of delivery challans, lorry receipt, mode of transport of goods, payment of octroi, if any. The assessee also failed to produce the above parties before the AO for examination. Referring to case laws, the AO observed that mere payment by account cheque is not sufficient proof for claiming any expenditure. In view of the above, the AO made an addition of Rs. 1,88,40,628/- u/s 69C. 5.1 Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) held that (i) if the assessee has fulfilled its onus of making the payments by cheque and has supplied the address of the sellers, then it cannot be presumed that the sellers were bogus simply because the sellers were not found at the given address; however, at the same time it cannot be said that the in....
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....rials on record. The reasons for our decisions on the above ground of appeal are as under. We find that similar issue arose before ITAT 'E' Bench, Mumbai in the case of the assessee for the immediate previous assessment year 2010-11in ITA No. 2559/Mum/2014. The Tribunal upheld the disallowance @ 15% of the bogus purchases made by the Ld. CIT(A). Facts being similar, we direct the AO to estimate the profit @ 15% on the bogus purchases of Rs. 1,88,40,628/- in place of 28.4% made by the Ld. CIT(A) and make the addition accordingly. 5.5 Thus the 1st & 2nd ground of appeal of the Revenue and the 1st cross objection by the assessee are partly allowed. 6. Now we move to the 3rd ground of appeal raised by the Revenue. The AO, during the course of assessment proceedings, found from the profit and loss account that the assessee has debited a total remuneration of Rs. 1,38,72,199/- paid to the partners. However, he found from the supplementary deed the following: "book profit shall be calculated on the basis as shown by the books and computed as provided in S 28 to S 44D (Chapter IV-D) of the Income Tax Act without deducting the remuneration paid or payable to the partners f....
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....e order passed by the AO whereas the Ld. counsel of the assessee relies on the order passed by the Ld. CIT(A). 6.3 We have heard the rival submissions and perused the relevant materials on record. Indisputably, as per the partnership deed dated 22.05.2003, remuneration to the working partners has been authorized to be paid in accordance with the computation provided in section 40(b). We find that the AO has not taken into account the amended provision of section 40(b) for the impugned assessment year. The Ld. CIT(A) has rightly taken into account the said amended provision and then restricted the disallowance to Rs. 1,20,000/-. Accordingly, we uphold the order of the Ld. CIT(A) on the above ground of appeal. 6.4 Thus the 3rd ground of appeal filed by the Revenue is dismissed. 7. We now turn to the 4th ground of appeal filed by the Revenue. The AO observed that 13 creditors were existing from the financial year 2008-09 relevant to the assessment year 2009-10 and the assessee has not paid the same till the end of the impugned assessment year. Therefore, he made an addition of Rs. 37,34,907/- u/s 41(1) of the Act. 7.1 In appeal, the Ld. CIT(A) held that (i) the AO has n....