TaxTMI 
TaxTMI 
2018 (9) TMI 1248
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns and it, therefore, purchases numerous goods and articles from various suppliers from time to time. All payments are made by the appellant by account payee cheques and the purchases are supported by bills and delivery challans in some cases. During the assessment proceedings, the Assessing Officer called upon the appellant to prove the genuineness of the purchases aggregating to Rs. 3,60,24,582/. Though voluminous documentary evidence was produced to establish the genuineness of these purchases, the Assessing Officer was not satisfied therewith and asked the appellant to show cause why this entire amount should not be assessed as non-genuine purchases. With a view to buy peace and to avoid unending litigation, the appellant/assessee offered that the gross profit rate of the said purchases may be assessed as income. After considering the submissions of the appellant/assessee, the Assessing Officer passed the Assessment Order dated 28th March 2014 under section 143(3) read with section 145(3) of the Income Tax Act 1961 and held that 15% of the said purchases be assessed as income. Though the said view was taken by the Assessing Officer after a careful consideration of the facts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssed and promulgated, the Assessing Officer issued a communication dated 20th February 2014 to the appellant/assessee. In that he relied upon the information received from the Sales Tax Department of the Government of Maharashtra. That communication and information is in relation to certain parties, who have been issuing bills and accommodation entries so as to facilitate evasion of taxes. These parties were the modes or medium through which a huge sum due and payable as tax was evaded. Thus, the transactions with them are not genuine and they have merely accommodated the parties like the appellant/assessee. No goods have been supplied to them. Twenty Five (25) such entities are named in this communication and, therefore, the appellant is called upon to furnish details and give clarifications with regard to the transactions with these parties. It is evident that the Assessing Officer called for supporting documentary evidence which, inter alia, means copies of purchase orders and mode of dispatch of goods, copy of the ledger of the party with invoices raised, details of payment made with copy of the bank account from where the payment was made and such other and further relevant de....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... action be taken. It is thereafter that the Assessing Officer followed and as a matter of consistent policy that though the books of account of the assessee are liable to be rejected but the gross profit of the assessee in the year under consideration is 10.20% whereas in the preceding two Assessment Years i.e. Assessment Year 2009-2010 it is 13.31% and for Assessment Year 2010-2011, it is 12.93%. The average of this comes to 12.12%. Taking the base of this percentage, gross profit was estimated on the above transaction at 15%. That is why a sum of Rs. 54,03,687/was added to the total income of the assessee. Even penal action was initiated. It is in these circumstances the Assessing Officer passed the order. 13. Thereafter the assessee attempted to rectify this order and sought rectification thereof, but in the meanwhile, the Commissioner respondent before us intervened. The Commissioner issued the notice in that regard dated 4th September 2014, copy of which is at Exhibit J page 131 of the paperbook. He has stated in his notice that the entire alleged bogus purchases should have been disallowed. Pertinently because the assessee is engaged in running a hotel and there is no corr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gation. It is in these circumstances, the Commissioner did not agree with the Assessing Officer as also the assessee/appellant before us. There are reasons assigned, which to our mind appear to be cogent and satisfactory. The Commissioner held that once the assessee could not produce any material nor he could ensure the presence of the supplier before the Assessing Officer, citing difficulties and agreeing to addition of gross profit on the purchases would mean that the Assessing Officer was expected to complete the exercise in accordance with law. There was no reason for the Assessing Officer to accommodate the assessee in the manner done. His order was termed as erroneous inasmuch as it is prejudicial to the interest of the Revenue. 17. The Tribunal, in the impugned order, has upheld this view of the Commissioner and once again detailed reasons have been assigned to reject the contentions of the assessee. In paragraph 9 of the order under challenge, the Tribunal has referred to the records. It also referred to all the relevant judicial decisions in the field. It also referred to the Value Added Tax and Sales Tax Authorities communications. It also referred to the records produ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Section 263 of the Income Tax Act 1961. The Commissioner faulted the assessment by concluding that it was on a presumption that it was a revenue expenditure whereas in his view, the expenditure was in the nature of capital expenditure. 20. It is in this backdrop that this Court referred to the detailed arguments of both sides, the ambit and scope of the powers conferred in the Commissioner under section 263 of the Income Tax Act, 1961 and made the observations so also recorded the conclusions heavily relied upon by Mr.Joshi. They are to be found at pages 114 and 115 of this report. 21. There is absolutely no quarrel with regard to the legal proposition. The application of that would depend upon facts and circumstances of each case. There was never any doubt that Gabriel India Ltd. was in the manufacture of shock absorbers. There was never any dispute that there were plants located side by side at its factory at Mulund. There was never any dispute that the items were manufactured at these plants. There was a merger of those two plants and, therefore, relayout expenses were incurred and they were claimed as business expenses. The Commissioner could not have then launched a fish....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the claims that were allowed, but by that alone it cannot be said that the expenses were not incurred under this head or the claim was allowed without making any inquiry. The query pertaining to corporatec social responsibility was exhaustive. It was answered with requisite details. Under each head of the claim in respect of this corporate social responsibility, the data and the details were provided. Once the Assessing Officer was satisfied with this explanation and particularly coming from a public sector undertaking, that the Division Bench held that there is no scope for invoking Section 263 of the Income Tax Act 1961. Once again, this judgment is rendered in the peculiar facts and circumstances. This was a clear case where only one of the item i.e. item No.9 was taken up out of about 20 items in relation to the corporate social responsibility. That the expenses were incurred and the expenditure as well in relation to the discharge of such a social responsibility and by making contribution towards health, environment, sports, education activity and for each of these different heads, particulars were given in respect of every minor and major expenses, then, the explanation runni....