TaxTMI 
TaxTMI 
2021 (10) TMI 502
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....d back undelivered with the postal remark "No such firm in this Market or No such Firm or Incomplete address". The A.O. thereafter, deputed the Ward Inspector to serve these notices, but, he was also unable to search the above firms. The A.O. thereafter asked the assessee to produce the proprietors of these firms. Summons under section 131 of the I.T. Act was also issued and served on the Directors Shri Manoj Gupta and Shri Puneet Gupta on 23.10.2017 fixing the case for hearing on 31.10.2017 and 01.11.2017. However, neither the assessee appeared nor any reply was filed. The assessee also failed to produce the Proprietors of the Firms from which purchases were made. The A.O, therefore, again confronted the same to the assessee. Since the assessee did not produce the books of account nor made compliances to the show cause notice issued by the A.O, the A.O. rejected the books of account under section 145(3) of the I.T. Act, 1961. He observed that the 12 firms from which the assessee has shown to have purchased the goods are not existing but are bogus. These firms, according to the A.O. are created by the assessee himself to generate bogus bills. The A.O. analysed the modus operandi ad....
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.... shown by appellant amounting to Rs. 41,24,01,230/- are bogus and merely accommodation entries. Probably the appellant also was knowing and was sure about this fact and that was the reason, he admitted by filing affidavit that these purchases are bogus and not verifiable and in view of that, he expressed his willingness to declare the net profit @ 0.50% on this turnover and promised to pay tax in four installments on or before 31.03.2018. Thus, at one hand the appellant has agreed for addition by filing affidavit during the assessment proceedings, on the other hand, disregarding the agreement before AO, it has filed appeal against the addition. It is clear that because of agreement by AR of appellant, AO did not make further inquiry to verify or examine the genuineness of expenses or evidence produced before him in respect of purchases. Now, taking the benefit of this, appellant has claimed that the purchases made by him are genuine and the A.O. has wrongly made the addition. This act of appellant cannot be supported. As held by Hon'ble High Court of Allahabad in the case Sterling Machine Tools vs. CIT reported in 123 ITR 181, assessment based on assessee's admission is not....
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.... was forced to surrender during the assessment because : a. Harassment of the parties was done to whom the goods were sold and huge payments were outstanding. b. The surrender was forced as outstanding amount from the parties was on account of credit sale and chart submitted clearly shows there was outstanding amount. c. Losing the outstanding amount would ruin the assessee. d. The surrender was conditional for not initiating penalty proceeding and also because suppliers were not traceable being small traders though goods supplied were not disputed. 4. That Ld. Commissioner of Income Tax (Appeals) has grossly erred in law as well as on facts in sustaining the addition made by Ld.AO to the tune of Rs. 1,00,000 on account of unexplained share capital, thereby ignoring that : a. No adverse material has been brought on record to rebut the evidences furnished by the assessee. b. Addition has been made purely on assumption, presumption, suspicion, surmises and conjectures and as such, addition made is unsustainable in law. 5. That Ld. CIT(A) erred in law as well as on facts in confirming the action of AO in rejecting the books of account wherein the AO proceeded t....
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....Learned Counsel for the Assessee filed the following comparative chart and submitted that the A.O. in the order passed under section 143(3) has adopted the net profit of 0.029% in A.Y. 2017-2018 and profit rate of 0.045% was accepted under section 143(1). 3.3. He submitted that the assessee during the year under consideration has declared net profit of 0.055% which has been enhanced by the A.O. to 0.5% which is not justified since this is the first year of operation of the company. 3.4. The Learned Counsel for the Assessee referring to various decisions submitted that when sales are accepted and assessee has produced the books of account, purchases and sales and stock register etc., and the payments have been made through banking channels, merely because the notice issued under section 133(6) of the I.T. Act, 1961, were returned unserved or that the assessee failed to produce the parties, cannot be a ground to make huge additions. He accordingly submitted that the addition made by the A.O. and sustained by the Ld. CIT(A) should be deleted. 3.5. So far as the addition of Rs. 1 lakhs on account of share capital is concerned, he submitted that this is the first year of operation of....
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.... preceding paragraphs. It is the submission of the Learned Counsel for the Assessee that this being the first year of operation of the company and since the assessee had produced the books of account including the details of purchases, sales, stock register, list of debtors and creditors etc., before the A.O, therefore, adoption of profit rate of 0.5% of the turnover is not justified especially when the A.O. in the order passed under section 143(3) for A.Y. 2017-18 has accepted the net profit rate of 0.029% declared by the assessee. Further it is also his submission that this being the first year of operation, no addition under section 68 could have been made to the share capital of the company of Rs. 1 lakh and addition if any, could have been made in the hands of the Directors. 5.1. I find some force in the above arguments of the Learned Counsel for the Assessee. It is an admitted fact that this is the first year of operation of the assessee-company. The assessee has produced books of account before A.O. and the sales declared by the assessee has not been doubted. Further the A.O. in the subsequent years has accepted the book results i.e., 0.045% in A.Y. 2016-17 under section 14....