TaxTMI 
TaxTMI 
2021 (6) TMI 116
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....ome Tax, Ahmedabad -5 has erred in treating the purchase of standing teakwood timber of Rs. 3,92,59,500/- as bogus only on the basis of statement of one of the partners Shri Sunilkumar Raghuvirprasad Agarwal of M/s. Greenwell Orchard during the course of survey proceedings in the case of M/s. Raghuvir Synthetics Ltd. He further erred in holding that if the purchases are bogus sales are also bogus. 3. The Learned Comm. of Income Tax, Ahmedabad -5 has erred in holding that as the A.O. treated the purchases as bogus, the source of credits shown in the books of account/bank account utilized for the purchase should have been treated unexplained credits u/s.68 of the Act as the source was not explained and substantiated by the assessee and hence there is underassessment of income of Rs. 3,92,59,500/-. 4. The Learned Comm. of Income Tax, Ahmedabad -5 has erred in holding that the failure to conduct necessary enquiry in this respect has rendered the assessment f framed being made without application of mind and erroneous so far that it is also prejudicial to the interest of the revenue. 5. The Learned Comm. of Income Tax, Ahmedabad -5 has erred in passing an orde....
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....Orchard, it was denied to have any link with Shri Saket M Jain and also failed to establish the sale of standing trees as genuine. 4.2 Based on above information, the assessment of the assessee was reopened under section 147 of the Act. During the escapement proceeding the AO proposed to reject the book result of the assessee and enhance the GP @ 8% on following ground. (1) Low GP i.e. 2.34 % against the sale of Rs. 4,02,01,178/- (2) Sale is not genuine and proper for the reason that both the parties are i.e. Assessee and buyer were not paying sales tax. Similarly, the invoice does not contain sale tax details or registration detail. (3) Purchase against the sale is also bogus on the basis of information received from the I.T.O ward-6(5) of Ahmadabad. 4.3 However the Assessee in reply to the proposed rejection claimed that both the sale & purchase are genuine and the necessary details were filed before the AO during the original proceedings. The assessee also claimed that information received from the ITO ward-6(5) Ahmedabad pertains to the A.Y. 2013-14 which does not to the year under consideration. The assessee further claimed that the sales amoun....
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....e the AO held that the purchases of teakwood from M/s Greenwell Orchard is bogus and accordingly, the AO rejected the book result of the assessee. Thus the AO estimated the profit @ 8% of the turnover. But the AO in such situation instead of estimating the profit should have held the corresponding sales as bogus. Thus he should have examined the genuineness of amount credited in assessee books for payment to supplier i.e. M/s Greenwell Orchard. As such the AO has given a contrary finding i.e. on one hand holding the purchases as bogus and on other hand estimating the profit instead of treating the sales made by the assessee as unexplained cash credit under section 68 of the Act. 7.1 In view of the above the Learned Pr. CIT held the assessment order framed under section 143(3) read with section 147 of the Act vide order dated 26/12/2016 as erroneous insofar prejudicial to the interest of Revenue and directed the AO for De-novo assessment. 8. Being aggrieved by the order of the learned Pr. CIT the assessee is in appeal before us. 9. The learned AR for the assessee before us filed a paper book running from pages 1 to 96 and submitted that the transactions of purchase and sale....
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....y the learned Pr. CIT found that the proceedings were initiated under section 147 of the Act on the reasoning that the purchases made by the assessee from the party namely M/s Greenwell Orchard amounting to Rs. 3,92,59,500/- is bogus. Thus once purchases are bogus then the sales shown by the assessee against such purchases are also bogus. But the AO in the assessment framed under section 143(3) read with section 147 of the Act has admitted the transaction of purchase and sales as genuine and estimated profit at the rate of 8% of the turnover. 11.4 In view of the above the learned CIT held that once purchases are bogus then it is implied that sales are also bogus. Therefore the amount of sale shown by the assessee in the books of accounts amounting to Rs. 4,02,01,728/- should have been treated as unexplained cash credit under section 68 of the Act. The learned Pr. CIT also referred to the judgment of Delhi High Court in the case of Pr. CIT vs. Wadhwa Designs ITA No 66/2018 in support of his view. Accordingly, the learned Pr. CIT was of the opinion that the finding of the AO in the assessment framed under section 143(3) read with section 147 of the Act is contrary and against the ....
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....it worthiness upon the assessee, for invoking the provision of section 68 of the Act were duly complied with. Accordingly, the AO has not treated the amount of sales as unexplained cash credit under section 68 of the Act. Thus it is transpired that the AO has taken a conscious view which was one of the possible view by accepting the purchases and sales as genuine. Thus in our considered view the learned Pr. CIT cannot substitute the possible view taken by the AO by his (ld. CIT-A) own view. In holding so we draw support and guidance from the order of Hon'ble Supreme Court in case of Malabar Industries Co. Ltd. vs. CIT reported 243 ITR 83 where the Hon'ble apex court has held as under: Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopts one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law.....