2018 (1) TMI 580

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.... the fact that the assessee could produce confirmation/ supplier only to the tune of 61.93 per cent. of the total purchases of Rs. 5,27,81,496 and in not appreciating that the onus is on the asses see to prove the genuineness of the entice purchases claimed to have been made by it." 3. The assessee has raised the following grounds in its cross-objection : "1. That the worthy Commissioner of Income-tax (Appeals) has erred in restricting the addition to the tune of Rs. 15 lakhs as per paragraph 3.1.3 of the order. 2. That the restricting of the addition to the tune of Rs. 15 lakhs is against the facts and circumstances of the case." 4. Brief facts of the case are that the return declaring an income of Rs. 17,91,640 was filed on September 30, 2011. The assessee-firm is in the business of construction of road, building etc. During the course of assessment proceedings, the Assessing Officer noted that the assessee-firm who is a civil contractor carried on contract of construction of roads and building etc. The assessee had debited the purchases of construction material in the shape of bitumen, stone/crasher, sand, bricks, cement, mitti etc, to the tune of Rs. 5,2....

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....ng Officer without considering that the purchases to the tune of 61.93 per cent. of Rs. 527.81 lakhs have proved made the addition of Rs. 1,97,55,357 in respect of the parties, who could not be, produced by it only on the basis that no confirmations have been filed nor such parties had been produced during the course of hearing before the Assessing Officer. 3.7 The appellant has further strongly contended that the appellant is in line of this business from past many years and in the earlier years the book results of the appellant have been accepted consistently year after year on the basis of same set of records and books of account as maintained in this year. Apart from this the appellant has further contended that the appellant was asked to file the confirmation is in respect of such purchases of Rs. 1,97,55,357 at the fag end of 2013 and as on March 31, 2011, no amount was payable in respect of such parties from whom, purchases have been made and, as such, the appellant had no means to have the address of such parties under such circumstances. 3.8 The appellant has further strongly contended that it is a registered a class contractor and there has been no dispu....

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.... N. P. Ratio N. P. after N. P. 2009-10 1,83,69,944 3,92,449 2.14 % NIL 2.14% 2010-11 3,95,09,598 6,75,578 1.71% NIL 1.71% 2011-12 8,56,17,738 17,72,675 2.07 % 2,15,28,032 25.14% 2012-13 9,80,97,467 20,37,288 2.08 % 25,89,027 2.64 % 2013-14 9,48,06,276 27,72,423 2.92 % 33,13,042 3.50 % 2014-15 8,81,76,823 41,02,032 4.65 % Not assessed 4.65 % 2015-16 10,15,63,577 45,34,561 4.46 % Not yet assessed 4.46 % 3.10 The appellant has also contested that the Assessing Officer observed that the appellant had produced only 9 suppliers out of list of 30 suppliers filed by the appellant and on the repeated request the appellant failed to produce remaining suppliers. Both are mentioned below : a. The appellant produced following suppliers :  Sl. No. Name of the supplier Amount of purchases 1 Abinash Traders, Ludhiana Rs. 10,07,100 2. Guru Teg Bahadur Co., Ludhiana ....

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....sessing income at the rate of 12 per cent. has failed to take steps which would statutorily casted upon him to arrive at the conclusion to make him adding the huge addition of Rs. 1,97,55,537 on account of discrepancies in verification of the purchasers. In my view, the Assessing Officer has failed to apply the logic behind the rejection of an entire purchase of Rs. 1,97,55,537 whereas it has not given any logic as to from which was the appellant has purchased or utilised the material under consideration for which the disallowance of Rs. 1,97,55,537 have been made. The Assessing Officer has also not supplied the logic of pointed out towards any other defects in the books of account of the appellant which has compelled him to make such huge addition. The Assessing Officer has not even cared to reject the books of account under section 145(3) of the Act before applying his logic of making such huge addition. The fact that of accounts of the appellant has been audited by the chartered accountant and the Assessing Officer has not pointed out any major defects and rejected the books of account in order to arrive the true affairs of the appellant. 3.12 Apparently, it is observed....

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....h comes to 66.3 per cent. of the remaining purchases. The learned authorised representative further relied on the submissions made before the Commissioner of Income-tax (Appeals). 9. We have heard learned representatives of both the parties and perused the material placed before us and also the order of the learned Commissioner of Income-tax (Appeals). 10. The assessee has been continuously declaring the net profit in the range of 1.71 per cent. to 4.65 per cent. and the disallowance made by the Assessing Officer if accepted would increase the net profit to the tune of 25.15 per cent. which is very abnormal. The contention of the authorised representative that the suppliers of these goods have no permanent place for carrying on the business can be accepted. There were no defects in the books of account of the assessee has been pointed out by the Assessing Officer. It cannot also be said that after purchasing bitumen to the tune of Rs. 2.30 crores in the work can be executed by using the building material to the tune of Rs. 1.07 crores only as equivalent building material is also required to utilise the bitumen. Moreover the assessee has done major part of the work for the Gov....