2025 (10) TMI 1014

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....r 2012-13 vide his order dated 17.12.2019. 2. The first issue in this appeal is as regards to the order of the CIT(A) confirming the action of the AO in making the disallowance of Rs. 37,60,000/- being 25% of the total sales of Rs. 1,50,40,000/- made to Jyoti Products by treating the same as bogus sales by resorting to the provisions of section 37 of the Act. 3. I have heard the rival contentions and gone through the facts and circumstances of the case. The assessee company is engaged in trading of bag material like polyster/zippers/slippers/polyfiber etc. The Assessing Officer noticed from the information received from DDIT, Investigation Unit 1(2), New Delhi that Jyoti Products is a company who was an entry provider and associated w....

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....bserving in para no 11 as under:- "11. In view of the above and after considering the facts of the case a disallowance of 25% of the amount of bogus sales/transactions amounting to Rs. 1,50,40,000/- which comes to Rs. 37,60,000/- is made to the income of the assessee u/s. 37 of the Act. Since the assessee has furnished the inaccurate particulars of income, and, thereby, concealed its income, therefore, the penalty proceedings are also initiated u/s. 271(1)(C) of the Act separately." Aggrieved, assessee preferred the appeal before the Ld. CIT(A). 4. Ld. CIT(A) confirmed the action of the Assessing Officer by observing in para 5.4 as under:- "Appellant's Contention: The sales to M/s Jyoti Product were genuine, reco....

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....oduct's financial capacity or business operations. The AO applied a 25% disallowance, following NK Proteins and Vijay Proteins Ltd, assuming material receipt but disputing the source. The ledgers suggest some material was sold, but the lack of delivery or payment proof supports the AO's conclusion of non-genuine transactions. The appellant has not discharged its burden of proof under section 68. The stock ledgers and import documents are insufficient without evidence of delivery, payment, or M/s Jyoti Product's order. The DDIT's findings and unanswered section 133(6) notices justify the AO's conclusion. The 25% disallowance is reasonable, as it accounts for possible material movement while addressing th....

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.... same on 28.12.2019 detailing the facts of the case which are part of the records. On perusal of the same, it is found that figures have been reconciled but the difference of Rs. 12,77,592/- still prevails for which the assessee has got no explanation. As the assessee has failed to explain the difference mentioned above, it means he has nothing to say and it is clear that this difference of Rs. 12,77,592/- is unexplained, undisclosed income of the assessee and added back to return income of the assessee." 5.1 I have also gone through the accounts of Jyoti Products and noted that the assessee is one of the sundry creditors for an amount of Rs. 55,48,270/- as disclosed in the books of accounts of Jyoti Products. Assessee ....