TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 2042
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....ated 28.03.2014 under section 147 of the Income Tax Act, 1961 ( the Act) for the A.Y 2012-13 passed by the then DCIT, Circle-53, Kolkata (A) at present DCIT, Circle-26, Kolkata. 2. The return of income for the A.Y 2012-13 was filed on 24.03.2013 declaring a total income of Rs. 23,46,550/-. The appellant is engaged in the business of manufacture and processing of leather and trading of leather chemicals.. Income was finally assessed at Rs. 2,73,68,120/-. 3. The appellant has taken following grounds of appeal: 1.For that the Assessing Officer was quite unjustified by disallowing purchases of Rs. 2,50,21,568/- as bogus purchases though the supporting evidences were given to the Assessing Officer during the course of scrutiny. 2. For that Assessing Officer has framed the Assessment Order based on Hypothetical imaginary facts, surmise and without applying his mind. 3. For that assessment order is bad in fact as well as in law and hence it is liable to be quashed. 4. For that the appellant craves leave to add/alter/amend/any other ground/grounds/on or before the hearing of the appeal to add further elucidation to any or all of the gro....
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....ad confirmed the fact that it had indulged in obtaining fake bills of Raw Hide purchases from these four parties as none of them had the requisite permission under the Sales Tax Act/V.A. T Act to deal in Raw Hides. Now the assessee, in the appellate proceedings is making a plea that they were not financial transactions but trading transactions. This is a concocted story fabricated by the assessee as never before the AO, the assessee had given this argument. Further to prove this fact, if all the challans produced by assessee are looked into, it would reveal that they entail transaction referring to claim of return of the hides given to them for treatment post the date of survey ie 22/01/2013 i.e. in the month of March 2013 which points at an afterthought strategy. The assessment proceeding was going in the month of March, 2014 and the assessee had submitted its final reply on 14103/2014 while challans are dated 09/03/2013 which precedes the date of reply. Thus, he had ample opportunity to submit it before AO. But the said facts were never produced before the AO during the course of assessment proceedings. Thus, it is clear that it is an afterthought and assessee has made a....
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....s been enunciated by the Special Bench of ITAT, Delhi in the case of Majoj Aggarwal Vs DCIT (113 ITD 377). In the decided case the ITAT held that purchases are in the nature of business expenditure and therefore the amount credited on account of purchases is not a cash credit. The appellant submits that the AO erred in invoking provisions of section 68 with reference to purchases made in the course of business and consequently the addition of Rs. 2,50,21,5681- made u/s 68 was legally untenable and thus deserves to deleted in full. Without prejudice the appellant submits that in aggregate 33,300 pieces of raw hides were purchased by the appellant from four parties on the understanding that after the hides were processed and the finished leather was produced the same would be resold to same parties. In substance therefore the transaction was more in the nature of barter. In the course of assessment the appellant had furnished before the AO the details of the sales made to the same four parties during the next financial year. The details furnished in the course of assessment thus established that the raw hides which the appellant had sourced from the said four partie....
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....d deduction for even one rupee out of the alleged cost of purchase of Rs. 2,50,21,568/-. It shall be noted that although the cost of purchase (inclusive of VAT) debited to the Profit and Loss account was Rs. 2,50,21,568/-, the corresponding value credited in the P&L a/c by way of closing stock of 33,000 pieces was Rs. 2,62,08,813/-. It shall thus be noted that the appellant had not claimed deduction for the disputed purchases of Rs. 2,50,21,568/- in arriving at taxable income for the relevant AY 2012-13 . We submit that the disallowance of Rs. 2,50,21,568/- has effectively resulted in double addition of the same amount. Reference in this regard is invited to the decision of the Ahemedabad Bench of Income Tax Appellate Tribunal in the case of ACIT Vs. J.B. Exports (ITA No.2126/Ahdl2008) dated 30.10.2014. The ITAT further held that since the sales/closing stock corresponding to the purchases had not been disputed by the AD and the profit, if any, arising there from had been assessed to tax, the AD erred in treating the purchases to be bogus. In the above decision the ITAT, Ahemdabad relied on the judgement rendered by another coordinate Be....
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....e parties is warranted. However the fact remains that (a) the appellant has shown purchase from parties which are bogus/not verifiable (b) explanation given by the appellant that the hide supplied by these parties have been processed after more than 9 months from the date of purchase looks to be specious as hide can hardly be kept unused for a period of 9 months. (c) In A. Y. 2013-14 many discrepancies were found during survey proceedings which are mentioned in my order (supra). In view of the above I am in opinion that the books of accounts of the appellant are not reliable and it deserves to be rejected. The G.P of the appellant may be estimated as in A.Y. 2013-14 at 5.83%. The A.O is directed to make the addition. Accordingly the addition for bogus purchases amounting to Rs. 2,50,21,568/- would be substituted by the GROSS PROFIT addition by estimating the GP at 5.83%. 3. We have given our thoughtful consideration to the rival contentions. Mr. Robin Choudhury, Addl. CIT/ld. DR/the Revenue vehemently emphasizes during the course of hearing that the Assessing Officer had rightly disallowed the assessee's purchases made from 4 parties ....