TaxTMI 
TaxTMI 
2024 (10) TMI 695
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....on the facts and in circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the assessee failed to produce the parties for verification, in spite of opportunity provided by the Assessing Officer". 3. "Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the AO u/s. 68 of Rs. 30,98,500/- on account of unexplained cash deposits, without appreciating the fact that the assessee has failed to explain the sources of these cash deposit." 2. The assessee is an individual and engaged in the business of trading in marbles and granites. The assessee filed the return of income for AY 2011-12 on 29.09.2011 declaring a total income of Rs. 4,78,453/-. The Assessing Officer (AO) received information from DGIT (Inv.) that the assessee has made purchases from the following parties who indulge in issuing bills without supply of goods for a commission, Sl.No. Name of the party Amount - Rs. 1 Ajay Stone 6,54,499/- 2 Sunico Traders Pvt. Ltd. 2,00,002/- 3 Deep Traders 58,030/- 4 Karni Granimarmo Pvt. Ltd. 1,70,471/- 5 Rajhans Steel India Pvt. Ltd. 13....
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....ion that the payment are made by account payee cheque is not a fool proof method of substantiating the assessee's claim and is not sufficient to establish the genuineness of the purchases. Reliance is placed on Kachwal Gems Vs. Jt. CIT (2007) 284 ITR 10 (SC). (ix) It is well-settled law that strict rules of evidence do not apply to IT Act and the real test with regard to genuineness of the transaction is "Preponderance of Probabilities and not "Beyond reasonable doubt". Reliance is placed on C Vasantlal& Co Vs CT (1962) 45 IFR 206 (SC) Chaturbhuj Panauj AIR 1969 (SC) and SumatiDaval Vs CIT (1995) 214 ITR 801 (SC) One has to consider the totality of facts, surrounding circumstances and human probability for arriving at a conclusion as held in CIT Vs. Durga Prasad H2 ITR $40 (SC) and SumatiDayal Vs. CIT (1995) 2141TR 801 (SC). (x) The purchases from hawala operator falls within the ambit of the term colourable devices and the Hon'ble Supreme Court observed in the case of McDowell and Co. I td. Vs. CTO 154 ITR 148 that Tax planning may be legitimate provided it is within the framework of law Colourable devices cannot be part of tax planning and it is wrong to....
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....eness of the above purchases and in light of the above exercises and conclusions, I am not satisfied with the profit declared by the assessee. From the above transactions, I am satisfied that the assessee has intentionally inflated the purchases to reduce his taxable income Thus, the above transactions clearly establish mens rea on the part of the assessee In view of these facts, an amount of Rs. 2,99,028/- i.e. 12.5% of suspicious purchase of Rs. 23,92,222/- on account of suppression of profits by the assessee by making non-genuine purchases is hereby disallowed and added back to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of the I.T Act. 1961 are initiated for furnishing inaccurate particulars of income and concealment of income. 4. The AO also noticed that the assessee has deposited a sum of Rs. 30,98,500/- and called on the assessee to furnish the source of the cash deposit. The assessee submitted before the AO that the deposits are out of the withdrawals from the bank during the year and furnished bank statements in this regard. However, the AO did not accept the submissions of the assessee and held that "(i) The source of deposit o....
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....antiate the source for subsequent deposits and this fact has not been questioned by the AO. The ld. AR further submitted that the AO has made the addition stating that the assessee had no reason to hold such huge cash and that the assessee should have made payments using Non-cash Methods. The ld. AR also submitted that from the said findings of the AO it is clear that the addition is based on mere surmise and conjecture and not based on any adverse factual finding with regard to the evidences submitted. Accordingly, the ld. AR argued that the CIT(A) has correctly deleted the addition. 8. We heard the parties and perused the material on record. The assessment was re-opened in assessee's case based on information received from DGIT (Inv.) with regard to certain alleged bogus purchases. The AO while completing the assessment has applied 12.5% on the impugned transactions and made addition of Rs. 2,99,028/-. The AO also made an addition of Rs. 30,98,500/- under section 68 of the Act towards cash deposited into the bank account. The CIT(A) restricted the G.P. rate to 10% and deleted the addition made under section 68 of the Act. With regard to the alleged bogus purchase from the ....