TaxTMI 
TaxTMI 
2025 (5) TMI 1068
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....re or during the hearing of this appeal. 2. The brief facts of the case are that the assessee is engaged in the business of trading of mustard oil cake and groundnut oil cake in its proprietary concern M/s Shiv Enterprises. He filed his return of income on 11.03.2022 declaring total income of Rs. 15,34,520/- (PB 40-43). The AO observed that assessee has made substantial purchases from three suppliers i.e. Sh. Parshottam Agarwal (M/s Jagdamba Traders), Jagdamba Enterprises and Smt. Parwati Agarwal (M/s ParwatiCottex and Oil Industries)who have not filed ITR for the relevant year under consideration and have made large sales transaction with the assessee. In response to notice issued notice u/s 133(6) on 09.11.2022 no reply has been received from these parties. Accordingly, AO vide show cause notice required the assessee to explain why the total purchases of Rs. 9,60,01,182/- should not be considered as unexplained expenditure and added back to the income of assessee. In response to the same, assessee vide letter dated 14.12.2022 filed audit report, balance sheet, bank account statements, GST returns, purchase invoice along with e-way bills, ledgers, and transportation bills by va....
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....the ld. CIT (A). The ld. A/R further submitted his written submissions as under : "1. The assessee is maintaining day to day books of accounts. The books of account is duly audited u/s 44AB. The same is also supported by the stock item register (PB 51-62) maintained on day to day basis. The purchase and sales made by the assessee are duly supported by the bills and vouchers. The AO accepted the books of accounts except purchases made from the three parties namely Jagdamba Enterprises, Jagdamba Traders and ParwatiCottex& Oil Industries. The corresponding sales made out of these purchases have been accepted by the AO. 2. In assessment proceeding, in respect of the purchases made from all the three parties, the assessee has filed the following evidences:- (i) Copy of purchase bills along with transport builty and E-way bills of goods purchased(PB 63-243) (ii) Copy of GST returns (GSTR-2A and GSTR3B) (iii) Ledger account and confirmation of the party along with the bank statement indicating payment by cheque(PB 244-306) (iv) Stock register indicating the receipt of goods and thereafter sold All these documents clearly prove....
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....9825 2665 09.01.2021 Khandelwal Traders 259 694120 2680 11.01.2021 Jagdamba enterprises 104.00 271440 2610 11.01.2021 Khandelwal Traders 245 661500 2700 21.01.2021 Jagdamba enterprises 29.70 77962.5 2625 21.01.2021 Shree Sai Enterprises 260 663000 2550 02.02.2021 ParwatiCottex and Oil industries 98.00 257838 2631 02.02.2021 Falak Enterprises 97.5 254962.5 2615 17.03.2021 ParwatiCottex and Oil industries 97.50 231172.5 2371 18.03.2021 Falak Enterprises 258.7 582333.7 2251 From the above table, it is clear that the rate of most of the purchase transactions from these three parties is comparable to the rate of purchases made from other parties. Thus the purchases made by the assessee from all these parties are fully verifiable. For this purpose reliance is placed on the decision of Hon'ble Supreme Court in case of PCIT Vs. TejuaRohitkumar Kapadia (2018) 256 Taxman 213 wherein SC upheld the order of Gujarat High Court and dismissed the special leave petition filed by the department. In this case, Hon'ble High Court of Gujarat dismissed the a....
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....ences. There is no basis with the AO to allege that the vehicle number mentioned on the builty are non-existing or non-commercial vehicle ignoring that E-way bill can't be generated if the vehicle is not existing. Hence on the basis of the alleged defect in the transportation details, the purchases made by the assessee can't be treated as bogus. (iii) So far as same handwriting in the builty is concerned, it is submitted that all the three suppliers are family concerns as evident from the following table:- Name of the firm Status Remarks Jagdamba Enterprises Partnership firm Partners are family members of the supplier ParwatiCottex and Oil Industries Proprietary concern Proprietor is Parwati Agarwal - wife of Purshottam Agarwal Jagdamba Traders Proprietary concern Proprietor is Purshottam Agarwal The accountant of all the three firms was same. It is a general practice in the market that transport builty is made by the person of the supplier and therefore the hand writing in all the builty is similar. Hence for this reason the purchases made from these parties can't be treated as non-verifiable. (iv) The assessee has bee....
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....t to examine the four sellers i.e. M/s ParwatiCottex Oil Industries, M/s Jagdamba Traders, M/s SJI EXIM and M/s Khandelwal Industries to verify whether the purchases made by it is genuine. This firm furnished all the documentary evidences i.e. ledger account of suppliers, purchase invoices, E-way bills, builties, stock records, bank statement showing payment to suppliers, GST returns and contended that if the suppliers were not filling returns of income, it does not mean that business transactions made by it with the parties are suspicious and non-genuine. The AO after considering the various evidences accepted the purchases made from these parties as genuine by holding as under:- "6. It is observed from the ledger extracts and tax invoices there is a bulk purchases periodically and supported by periodical payments through banking channels which suffered GST. 7. It is observed that the assessee firm has admitted a gross profit on mustard trade at 1.47% which is in excess of industry average of 1.25%. 9. Since, the CASS reason for selection of scrutiny was verified with respect to purchases regarding purchases from four suppliers who have not filed their r....
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....n this account also, no addition is justified. This finding of Ld. CIT(A) is not challenged by the department and therefore also, the ground taken by the department becomes infructuous. In view of above, Ld. CIT(A) has rightly deleted the addition and therefore the appeal filed by the department be dismissed." 5. We have heard the rival submissions, perused the material on record, gone through the orders of the revenue authorities and the case laws relied on by both the sides.We note that the AO disallowed the entire purchases of Rs. 9,60,01,182/- for the reason that assessee could not get verified the purchases made from M/s Jagdamba Traders(Prop. Shri Purshottam Agarwal), Jagdamba Enterprises and M/s Parwati Cottex and Oil Industries(Prop. Smt. Parwati Agarwal). The Ld. CIT(A) deleted the addition by giving following findings at para 8.1 to 8.4 of the order. "8.1 I find that the appellant is maintaining day-to-day books of accounts along with stock register. The appellant during the course of assessment proceeding as well as in appellate proceedings in respect of purchases made from all the three parties has filed the following documents:- (i) Purchase bil....
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....ier in most of the purchases also gets the weight through Dharm kanta and the appellant has filed copies of the few Dharam Kanta slips in respect of purchases made from Parwati Cottex & Oil Industries and Jagdamba Traders. This proves that goods are actually purchased by the appellant. Besides this, in some of the cases appellant, also gets the weight at its station. c. It is also noted that similar purchases from two of the above parties were made by appellant's group concern Nagarmal Kanhaiyalal in the year under consideration wherein also the assessment was made u/s 143(3). In this case the matter was referred to Verification Unit to examine the four sellers i.e. M/s Parwati Cottex Oil Industries, Jagdamba Traders, M/s SJI EXIM, M/s Khandelwal industries to verify whether the purchases made by the assessee firm are genuine. Assessee firm has furnished all the documentary evidences i.e., ledger account of suppliers, purchase invoices, E-way bills, bilities, stock records, bank statement showing payment to suppliers, GST returns. The assessee contended that the suppliers were not filling returns of income does not mean that business transactions made by the assessee f....
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....f) the supplier has accounted for the purchases made by the assessee and paid taxes thereon. Similarly, the various other cases filed by the appellant also support his case. As against this the facts of the cases referred by the AO are not applicable. 8.4 I also find force in the alternate argument of Ld AR that once the purchases are not verifiable, the best course of action is to reject the books of accounts and apply the G.P rate based on the past history. I note that the GP and NP rate for the year is better than last year. Therefore, on this account also no addition is justified." During the course of hearing, Ld. D/R relied on the decision of Hon'ble Bombay High Court in case of PCIT vs Kanak Impex India Ltd. order dated 03.03.2025 where it confirmed the addition made by AO on account of bogus purchases of Rs. 20,06,80,150/- for the reason that assessee failed to prove genuineness of the purchases, the case was reopened on the ground that purchases made by the assessee are from hawala operator, the assessee choose not to attend the reassessment proceedings, the assessee having consciously and intentionally decided not to join the investigation, he cannot now conte....