TaxTMI 
TaxTMI 
2023 (3) TMI 976
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....tions were not carried during the assessment year as the assessee's creditor parties from whom assessee claimed purchase of diamonds were either not existing or were not involved in genuine business during the year under consideration. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred by ignoring the finding and conclusion of the AO that in the stock register as well as bills of sales/purchase, there was no quality wise description of the items sold or purchased. There was not even, day to day or transaction to transaction bifurcation or clarification that what item was purchased, of what quality and what or how was the price of item sold determined because the sales were not made in a manner which exactly matched with the purchased item. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred by ignoring that in the sales bills and purchase bills which were produced, there was no acknowledgement of delivery of items which is a must in such high value goods transactions and is a norm in the diamond and jewellery industry. 5. On the facts and in the circumstances of the case and in la....
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.... of commission of Rs. 12,88,781/- about the brokerage and commission. On perusal of voucher of said expenses it was seen that the payments were made to broker or commission agent having address in Mumbai while sales on which brokerage and commission paid are made to local parties in Surat. The assessee failed to explain the basis of such discrepancies. On recording such discrepancies, the Assessing Officer issued show cause notice vide order sheet entry dated 22/03/2016 as to why business should not be considered as non-genuine and existing only on paper for the purpose of providing entries. 3. The assessee filed its reply dated 28/03/2016. The contents of reply of assessee is extracted in para 5.5 at page Nos. 4 to 14 of the assessment order. In the reply, the assessee stated that the assessee is regularly following mercantile system of accounting and that actual the income accruing or being received, the same has been shown. For rejecting of books of account, there are three conditions i.e. method of accounting is not regularly followed by assessee or if accounting standard is notified under sub-section (2) of Section 145, have not been regularly followed and or the Assessing ....
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....y baseless. The transaction was of earlier years and not for the assessment year in question. In the immediately preceding assessment year, no such doubt was raised about the genuineness of business activities and the assessments were completed under Section 143(3) of the Act. The books of account were accepted in previous assessment years. There cannot be a case where the Assessing Officer accepted the books of account in previous and subsequent assessment years and rejected in current assessment year by taking a view that the assessee is not maintaining consistency in accounting principle. The assessee made purchases in A.Y. 2012-13, which has been accepted by the Assessing Officer and no question over the genuineness of business activities of assessee was raised in his order. Books of account were produced during the course of assessment proceedings. The assessment was completed in A.Y. 2012-13 without any doubt. The report of Inspector relied by the Assessing Officer was not genuine. Such report was not provided to the assessee. Out of six parties namely Reva Gems & Jewels Ltd., Suyash Gems, Suparshva Gems Pvt. Ltd., Riddhi Exim Private Limited, R.A. Distributors Pvt. Ltd. and ....
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....epted by Assessing Officer in previous and succeeding assessment proceedings, thus, rejecting the same books of account in the current assessment year on same accounting principle is bad in the eyes of law on the delivery of goods, the assessee explained that the nature of goods dealt by assessee is such that the assessee himself or his few reliable employees used to physical delivery the goods to the sales parties or to the branch office of the assessee themselves. The law does not provide any restriction on the mode adopted for delivery of goods. Keeping in view the peculiar nature of goods, the assessee dealt with personal involvement of assessee in these aspects of business is inadvertent. To support such stand, the assessee also relied on various case laws. On the objection of Assessing Officer that "in none of the sale or purchase bill, the time duration in which the payment has to be made is written." The assessee explained that they maintained proper books of account required to be maintained under Rule 6F of the Income Tax Rules and income can properly be deduced therefrom. There is no law governing or describing the monetary condition to be stipulated in sales and purchas....
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....ransaction during this year. Further no question about the genuineness is raised by the assessing officer about the purchases from these three creditors. There is no transaction with these three parties during the current year. On the basis of above observation, the ld CIT(A) the estimation of addition of Rs. 2.06 Crore was deleted. Aggrieved by the order of ld. CIT(A), the Revenue has filed the present appeal before this Tribunal. 10. We have heard the submissions of learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the revenue and the learned Authorised Representative (ld. AR) of the assessee. The ld. CITDR for the revenue submits that the assessing officer rejected the books of accounts of the assessee by pointing out discrepancies. The assessee was not doing real business of trading or export or import. The parties shown as sundry creditors were not found at the given address when ward inspector visited their addresses. The assessing officer has not rejected the claim of sundry creditors, rather based his finding that the purchase shown by the assessee were not genuine. Once the purchase are found to be non-genuine therefore, income cannot be co....
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....ors Pvt. Ltd. and M.B. Offshore Distributor Private Limited, two creditors namely Suparshva Gems Pvt. Ltd. and Suyash Gems are related concerns, which have duly replied to the notice of assessing officer. The ld AR for the assessee has maintained quantitative details in respect of diamonds purchased and sold by it. There is no requirement of law to maintain quality details of each piece of diamond for computing the income. The income of assessee company can be very well computed on the basis of accounts already maintained by assessee. There was no defect in the method of accounting which requires the rejection of book results. Books of account cannot be rejected under Section 145(3) that only on the basis of fact that the assessee had not maintained the quality wise description of stock. The books of account had also been audited under Section 44AD of the act which has already been furnished. No defect was found or shown in the books of account just on the ground of acknowledgement of delivery of item is not available does not suffice valid ground for rejection of entire books of account of assessee. The books of account were accepted by Assessing Officer in previous and succeeding....