TaxTMI 
TaxTMI 
2019 (3) TMI 1544
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.... and in law, the Ld. CIT(A) justified in not appreciating the fact during the search and seizure operation, directors of such parties have accepted on oath that they are providing only accommodation entries and not doing any real business, the treatment of such loan as being genuine does not hold ground? 5. "The appellant prays that the order of the CIT(Appeals) of the above grounds be set aside and that of the AO be restored." 6. The appellant craves leave to amend or alter any ground or to submit additional new ground, which may be necessary." 3. The brief facts of the case are that the assessee filed its return of income for the A.Y. 2007-08 on 27.10.2007 declaring income to the tune of Rs. 3,71,53,457/-. The assessment of the assessee was completed u/s 143(3) of the I.T. Act on 10.11.2010 at an income of Rs. 3,71,53,460/-. Thereafter, the case was reopened u/s 147 of the Act after recording following reasons.:- "A search & seizure action was conducted on Rajendra Jain Group/Sanjay Choudhary Group/Dharmichand Jain Group on 3.10.2013 by the DGIT (Inv.), Mumbai. During the course of search proceedings, it was established that the group concerns are all paper companies / fir....
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....control is by Shri Rajendra ]ain/ Sanjay Choudary/ Dharmichand Jain Group, and their family members. They have also admitted that they are only giving accommodation entries to several parties and the appellant is one among them. 7.4 After weighing the evidence pro and con, I am of the opinion that onus is always on the appellant to prove as to how the material purchased was firstly obtained when the suppliers themselves admitted that they never did the business and are merely name lenders for the business concerns of Shri Rajendra Jain/ Sanjay Choudary/ Dharmichand Jain Group, who have admitted that only accommodation entries were given and no actual sale to those parties. In view of the same, I am in agreement with the findings of the AO that the purchases are not made from these parties but from the grey market by paying cash and as the bills are not available for such transactions, obtain bills from third parties. From these findings, it can thus be safely assumed that the appellant has grossly failed in its duty to mitigate the burden cast upon it in so far as proving the genuineness of the transaction from the said parties are concerned. 7.5 Though the appellant argues in ....
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.... piling of mountains of black money, causing inflation. Thus, there is "the large hidden loss" to the community, by some of the members in the country being involved in the perpetual war waged between the tax payer and his expert team of advisors, and accountants on the one side and the tax gatherer and his perhaps not so successful advisors on the other side. 7.7 The onus to prove that apparent, is not the real one, is on the party who claims it to be so, as held by the Hon'ble Supreme Court in the case of CIT V. Daulat Ram Rawatmull [1973] 87 ITR 349 and CIT v. Durga Prasad More (supra). It is also a settled legal proposition that if no evidence is given by the party on whom the burden is cast, the issue must be found against him. In the instant case, the appellant has miserably failed to lead the evidence. The Hon'ble Supreme Court, in the case of Chuharmal v. CIT [1988] 172 ITR 250 / 38 Taxman 190 highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fettered, by technical rules of evidence, as held by the Hon'ble Supreme Court i....
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....Choudary/ Dharmichand Jain Group. AO treated the entire amount of purchases made from MIs Moulimani Impex Pvt. Ltd and at the same time not disturbed the sales and accepted the same. Without making the purchases, it is not possible to sell the goods after manufacturing the same. In view of the same, instead of adding the entire amount of purchases, it is right to find out what is the additional benefit by resorting to such bogus purchases, which the appellant would have made from such unknown entities. 7.10 Hon'ble Gujarat High Court in the case of CIT vs. Simit Sheth (2013) 38 Taxmann.com 385 (Guj), was seized with a similar issue where the AO had found that some of the alleged suppliers of steel to the assessee had not supplied any goods but had only provided sale bills and hence, purchases from the said parties were held to be bogus. The AO in that case added the entire amount of purchases to gross profit of theassessee. Ld. CIT(A) having found that the assessee had indeed purchased though not from named parties but other parties from grey market, partially sustained the addition as probable profit of the assessee. The Tribunal however, sustained the addition to the extent o....
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.... the TP wing is consistently in the region of around 1.75% to 3%. It is also brought to my notice by the Ld. AR that the Assessing Officers are adopting 3% as the profit element embedded on the non-genuine purchases made from Rajendra lain and other group concerns, in the subsequent assessments finlaised on the similar set of facts. In view of the same and also considering the profit margin in this sector, in my considered opinion, AO adding the entire amount of purchases is not based on correct footing, considering the above facts that the profit margin in this sector i.e. around 2 to 3 percent on trade/ manufacturing and the taxes saved is around 1% and also on purchases made from places like Surat, where there is no levy of tax. In the present case, the appellant filed a letter stating that the impugned purchases are made from Surat was not liable to VAT 1% and therefore, the benefit/ saving thereof is already reflected in the financial results of the year. On verification of the invoices, it is noticed that the entire purchase made from M/s Moulimani Impex Pvt. Ltd is from Surat and VAT is not levied on the said purchases. In view of the above, in my considered opinion, if the ....