TaxTMI 
TaxTMI 
2018 (1) TMI 1780
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....s of the case and in law the Ld. CIT (A) has erred in allowing the deduction of Rs. 37,59,26,621/- u/s 10AA of the I.T. Act, 1961 as the conditions laid down in section 10AA of the I.T. Act, 1961 for claiming deduction are not fulfilled. 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing relief of Rs. 9,74,41,636/- out of addition of Rs. 10,94,84,984/- made by the AO on account of bogus purchases." The appellant craves the indulgence to modify, alter, add any other ground of appeal. 4. As per the facts of the present case, the assessee is engaged in the business of trading & manufacturing of precious and semiprecious stones, diamonds and studded gold jewellery. The return of income was filed by the assessee on 12.10.12 declaring total income of Rs. 5,90,76,690/- & claimed exemption u/s 10AA of the I.T. Act. Subsequently the case was selected for scrutiny and after serving statutory notices and seeking reply of the assessee, order of assessment u/s 143(3) of the I.T. Act was passed on 28.03.13, thereby determining the income of the assessee at Rs. 54,70,62,290/-. Aggrieved by the order of AO, assessee ....
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....erial placed on record as well as the orders passed by revenue authorities. As per the facts of the case, during the assessment order, the AO observed that information was received from Investigation wing that one party namely Kotsons Impex Pvt. Ltd. has issued bogus purchase bills to various beneficiaries. Further, the party has also accepted in their statement recorded that they have issued bogus bills to various persons. Therefore, on the basis of above information, AO added an amount of Rs. 10.94. crores in the hands of the assessee. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and the CIT(A) restricted the additions @ 11% on the bogus purchases. Ld. DR relied upon the orders passed by AO whereas on the contrary Ld AR submitted before us that no additions are warranted in the present case and submitted that the books of accounts have not been rejected. It was also submitted that the sales corresponding to the alleged bogus purchases have not been disputed. In such circumstances, if sales are not disputed, purchases also cannot be doubted. Consequently, if the purchases are to be reduced from trading results, then the corresponding sales shall ....
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....f C. VasantLal and Company Vrs. CIT 45 ITR 206 (SC)(3 judges bench) wherein it was observed that 'the ITO is not bound by any technical rules of the law of evidence. It is open to him to collect material to facilitate assessment even by private enquiry. But, it he desires sto luse the material so collected, the assessee must be informed about the material and given adequate opportunity to explain it.' Since the copy of the said statement was made available to the AR of the assessee. In such circumstances, the assessee could have called the said director as the onus was upon the assessee to prove the genuineness of the purchases. This issue is also supported by the decision of the Hon'ble Supreme Court in the case of India Woolen Carpet Vrs. ITAT and others (2002) 178 CTR 420 (Raj.) Although, Ld. AR has relied upon the report of task group for diamond sector issued by Ministry of Commerce & Industry, Govt. of India, wherein it was stated that the diamond manufacturing and trading industry operates at a marigin of 1%- 3% only and that 2.5% shall be adopted as reasonable profit rate in the said industry. However the assessee in the present case himself has declared the net profit e....
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....of GP is being given. Hence we direct the AO to restrict the additions to the extent of 6.5% of the bogus purchases for over and above the regular profits disclosed by the assessee. Accordingly this ground raised by the revenue is dismissed. Now we take up ITA No. 153/JP/2014 filed by assessee 1. That on the facts and in the circumstances of the case the Ld. CIT (A) is wrong, unjust and has erred in law in upholding disallowance of directors remuneration to the extent of Rs. 25,74,000/- from profits of domestic unit of the appellant on the alleged ground that directors are doing work of both SEZ and domestic unit of the company. 2. That the Ld. CIT(A) is wrong on facts in not taking into consideration the submission of appellant that hundred percent of profits of Rs. 37,53,69,235/- derived by assessee company from its SEZ unit claimed as deduction u/s 10AA of I. T. Act, 61 is not wholly pertains to profits derived from providing services i.e. import of goods for the purposes of re-export out of India from SEZ unit but are profits of Rs. 34,41,31,677/- derived from export out of India of diamonds manufactured in its SEZ unit and profits of Rs. 3,12,37,5....
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.... findings in the present appeal in order to maintain judicial consistency which is applicable mutatis mutandis in the case of the assessee. Resultantly, this ground raised by the assessee is partly allowed. Ground No. 4 12. This ground is general in nature thus requires no specific adjudication. Now we take up ITA No. 124/JP/2015 for AY 2011-12 filed by revenue. 1.(i) "Whether on the facts and in the circumstances of the case and in law the Id. CIT(A) is justified in granting deduction of Rs. 42,07,25,556/- u/s 10AA of the Act, by holding that trading of goods is a service, eligible for deduction u/s 10AA of the Act." (ii) "Whether on the facts and in the circumstances of the case and in law the Id. CIT(A) is justified in enhancing the scope of the word "services" by adopting the definition of word "Services" from section 2(z) and second schedule of SEZ Act, 2005 and Rules 76 of SEZ Rules 2006, ignoring that definitely the same was not defined by the legislators under the Income Tax Act, and a literal meaning of the word "Service" was rightly taken by the Assessing Officer,." (iii) "Whether on the facts and in the circumstances of the case and in....
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....th statement u/s 14 of the Maharashtra Value Added Act, 2002 of the Proprietors of M/s Shradhha Trading Co. & M/s Banjara Enterprises. As per these statements, the above company/firms never purchased any goods & were only issuing bogus sales invoices/bills to the parties. A copy of the said statement is handed over to the A/R. In view of the fact that the quantitative details of sales/purchases are matching, the assessee was requested to show cause why the purchases made from above three parties may not be treated as unexplained bogus purchases u/s 69C of the I.T. Act, 1961 In the compliance vide letter dated 03/03/2014, assessee provided complete details of purchases (Photo copy of purchase bills) made from these 3 parties along with their ledger copy maintained in the books of accounts and payment details, however, AO has not convinced with assessee's explanation. In page 18 of his assessment order, AO has observed inter alia as under: " ....In the present case, the assessee has claimed purchases of Rs. 86,856/- from Shradhha Trading Company Rs. 19,84,09,928/- from Ansh Merchandise P. Ltd. and Rs. 2,42,966/- from Banjara enterprises and these partie....