2018 (2) TMI 1705

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....aw in even not following the decision of Hon'ble ITAT given in various cases where purchases are held to be unverifiable while dismissing the appeal of assessee for non-appearance. 3. The assessee craves rights to add, alter or amend any of the grounds of the appeal. 4. The appropriate cost be awarded to the assessee." 2. Earlier the appeal of the assessee was disposed of vide order 07.04.2016 however, subsequently the Tribunal vide order dated 04.01.2018 in M.A. No. 62/JP/2017 has recalled the earlier order for hearing and adjudication of the appeal afresh. 3. The assessee is engaged in the manufacturing and trading of jewellery etc. During the scrutiny assessment u/s 143(3) of the Act the AO asked to assessee to furnish details of purchase and raw material and furnish, the complete address of the supplier. In response the assessee vide his letter dated 24.11.2011 furnished the details. To verify the genuineness of the purchases made by the assessee the AO issued a notice u/s 133(6) to 10 suppliers asking them to furnish the details of sales made to the assessee. The AO also asked to furnish the copy of account of the assessee in their books as well as the ....

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....d that when the assessee has failed to discharge its onus to prove the genuineness of the purchases then, the Assessing Officer while making a disallowance of 25% of such purchases has taken a very lenient view. He has thus contended that disallowance made by the AO be confirmed. 6. We have considered the rival submissions as well as relevant material on record. The AO wanted to verify the genuineness of the purchase by issuing notice u/s 133(6) of the Act however, the notice issued to 8 out of 10 parties were received back un-served due to the reasons of "address moved", "not existed", "insuffient address" "refused" etc. The notice issued to the remaining two parties though did not received back un-served however, no compliance of notice u/s 133(6) were made by these two parties. The AO asked to produce the suppliers for examination however, the assessee produce the confirmation from the suppliers along with PAN. The AO accordingly rejected the books of accounts and made an addition equivalent to 25% of the purchases made from these 10 suppliers on account of unverifiable purchases. Thus, once the AO has rejected the books of accounts by invoking the provisions of section 145(3....

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....sue decided by this is in the realm of appreciation evidence. The find of Tribunal as mentioned in this judgment is as under:- "However, in our opinion the observation of the Assessing Officer that the assessee was prima facie required to prove the genuineness of the transaction and identity of the creditors is not misplaced because there is no distinction laid between the trade creditor and the non-trade creditor and we are further of the opinion that in case the assessee claims liability of payment to the trade creditors shown in the balance-sheet, the assessee is definitely required to prima facie prove the identity of the trade creditors as well as the genuineness of the transaction. In this case, admittedly the assessee has neither been able to disclose the complete addresses of the trade creditors nor is able to give the complete addresses of the consignors nor the name has been mentioned on the challan forms, so the verification of the same by the Assessing Officer became totally impracticable on account of lack of this complete information supplied by the assessee. It means that the assessee failed in establishing the genuineness of the so called trade creditors ap....

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....dation entries providers. When the AO rejected the book results u/s 145(3) of the Act, then the AO after rejection of the books of account can proceed to make the assessment on the basis of best judgment instead of resorting make the addition to the book results. Accordingly, in the facts and circumstances of the case and in view of the decision of this Tribunal in assessee's own case for A.Y. 2006-07 we do not find any error or illegality in the orders of the ld. CIT(A) in restricting the addition to the average GP rate based on the past history. Hence, the grounds raised in the Revenue appeals are rejected being without any substance or merits. 6. In the cross objection of the assessee has raised the common grounds is as under:- "1. In the facts and circumstances of the case and in law the ld CIT(A) has erred in confirming the action of the ld. AO in confirming the trading addition of Rs. 11.54 out of the total addition of Rs. 96,69,746/- made by the ld. AO. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the rejection of books and deleting the trading addition of Rs. 11.....