×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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01-03-2019, United Metal & Wire, Section 68, 133(6), 145(3), Tribunal Mumbai
These cross appeals filed by the assessee as well as the Revenue are directed against order of the Ld. CIT(A)-37, Mumbai, dated 28/09/2016 for Assessment Year 2012- 13. Since, facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are disposed of by this consolidated order. The assessee has raised following grounds of appeal:-
i. “In the facts & circumstances of the case as well as in law the Learned CIT(Appeals) erred in confirming the addition of Rs.3,43,000/- as unexplained Cash Credit and also making an addition of interest accrued thereon.
ii. In the facts & circumstances of the case as well as in law the Learned CIT(Appeals) erred in confirming the disallowance of expenses Rs.1,00,021/- being 10% of the expenses claimed” The Revenue has raised following grounds of appeal:-
1 The Id. CIT(A) has erred on fact and in law and in the circumstances of the case in deleting the addition of Rs.2,30,16,415/- made by the A.O. on account of discrepancy of pu chases.
2. The Id. CIT(A) erred in not considering that the assessee could not prove the genuineness and creditworthiness of the purchase transactions during the course of assessment proceedings.
3. The Id. CIT(A) has erred on fact and in law, in view of the Hon'ble Delhi High Court in the case of Commissioner of Income-Tax ......vs M/s La Medica, Delhi on 15 March, 2001 [2001 VAD Delhi 931, 92 (2001 DLT 406, 2001(59) DRJ 404] wherein the Hon'ble court has upheld the 100% disallowance of bogus purchases.
4. The Id. CIT(A) has erred on fact and in law and in the circumstances of the case in deleting and addition of Rs.1,56,77,456/- made on account of unexplained cash credit and unproved loans u/s 68 of the I.T. Act, 1961.
5. The appellant prays that the order of Ld.CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.
2. The brief, facts of the case are that the assessee is engaged in the business of manufacturing of paper covered aluminium wires, stripes, bars, etc, filed its return of income for AY 2012-13 on 27/09/2012, declaring total income of Rs.14,16,658/-. The case was selected for scrutiny and assessment was completed u/s 143(3) of the Income Tax Act, (hereinafter “the Act”) on 30/03/2015 determining total income at Rs.4,05,53,550/- by making additions towards disallowance 25% of purchase, from two parties on the ground that no details has been filed to justify purchases, additions towards unexplained cash credits u/s 68 of the Act of Rs.1,60,20,456/- and also disallowance of 10% expenses debited under the head motor car expenses, general expenses, miscellaneous expenses, conveyance expenses, labour welfare and sales promotion. Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the submissions of the assessee, have recorded reasons in its order dated 28/09/2016, partly allowed appeal filed by the assessee, where he had deleted additions made towards disallowance of purchase and also allowed partial relief in respect of additions made towards unexplained cash credit u/s 68 of the Act, however confirmed the additions made towards ad-hoc disallowance of expenses.
3. Aggrieved by order of the Ld. CIT(A), the assessee as well as Revenue is in appeal before us. The first issue came up for consideration for Revenue’s appeal is addition towards 25% of purchases from M/s Hindustan Copper Ltd. and M/s Sterlite Industries (I) Ltd.. During assessment proceedings, to examine purchases claimed by the assessee, notice u/s 133(6) were issued to certain parties on test check basis. In response of notice, M/s Hindustan Copper Ltd. and M/s Sterlite Industries (I) Ltd. did not respond. Thereafter, the AO asked the assessee to file confirmation from the parties along with stock register, quantitative details, reconciliation of raw material to production and also transportation bills related to purchase. In response, the assessee has filed complete details as called for by AO, including transportation bills to prove purchase from above parties. The AO after considering submissions of the assessee came to conclusion that the assessee has failed to prove how the material shown to have been purchased specifically used in the business of the assessee giving use patterns of the material. The assessee was also unable to produce latest address and whereabouts of these dealers/sellers. The onus of proving the genuineness of expenditure was not discharged by the assessee. When expenditure is claimed to have been incurred, the initial burden will be on the assessee to prove that expenditure was genuine, but the assessee fails to discharge its onus by filing necessary evidence, accordingly, after analyzing the book results of the assessee and also considering net profit declared for the year under consideration came to the conclusion that purchases claimed to have been made from above parties are not proved and hence rejected the books of accounts u/s 145(3) of the Act and added 25% unverifiable purchases u/s 69C of the Act.
4. The Ld. DR submitted that the Ld. CIT(A) was erred in deleting the addition made by the AO towards 25% of unverifiable purchases without appreciating the fact that the assessee not even able to file latest address of the dealer when notice issued u/s 133(6) of the Act, were returned un-served. The Ld. DR further submitted that the AO brought out