Shri Mukesh Ashmal Bokadia, Ahmedabad V. The Income tax Officer,Ward-2(4), Ahmedabad

ITA 995/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94670 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Assessee Lawyers: MAHAVEER CHAND JAIN
• Keywords: Bogus purchase; Unexplained cash credit; Unexplained expenditure
• Section: 69C; 234B; 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD , BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 995/AHD/2012 ASSESSMENT YEAR : 2007-08 MUKESH ASHMAL BOKADIA A-603, KEDAR TOWER, SHAHIBAUG, AHMEDABAD V/S . THE INCOME-TAX OFFICER, WARD 2(4), AHMEDABAD PAN NO. AAPPB9927N (APPELLANT) .. (RESPONDENT) /BY ASSESSEE SHRI MAHAVEER CHAND JAIN, A.R. / BY REVENUE SHRI D. C. MISHRA, SR. D.R. /DATE OF HEARING 24.08.2015 /DATE OF PRONOUNCEMENT 29.10.2015 O R D E R PER : MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-6, AHMEDABAD VIDE HIS ORDER DATED 12 TH MARCH, 2012. ASSESSMENT FOR A.Y. 2007- 08 WAS COMPLETED U/S.143(3) OF THE INCOME TAX ACT,1 961 (HEREINAFTER REFERRED TO AS THE ACT) BY ITO, WARD 2(4), AHMEDABAD ON 22 .12.2009. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- ITA NO. 995/AHD/12 A.Y. 07-08 (MUKESH ASHMAL BOKAD IA VS. ITO) PAGE 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ASSESSMENT ORDER PASSED BY LD.AO WAS BAD IN LAW AND THEREFORE, THE LD. CIT(A) DID NOT JUSTIFY IN SUSTAINING THE SAME. THE APPELLANT APPEALS FOR CANCELLING THE ASSE SSMENT ORDER. 2. THAT WITHOUT ANY PREJUDICE TO THE AFORESAID GROU ND OF APPEAL, THE APPELLANT APPEALS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. AO GROSSLY ERRED IN MAKING THE ADDITION OF R.3,34,56,223/- TO THE INCOM E RETURNED BY THE APPELLANT AND THE LD. CIT(A) DID NOT JUSTIFY IN SUSTAINING THE SA ME TO THE EXTENT OF RS.3,10,40,816/-. THE APPELLANT APPEALS FOR DELETION OF THE SUSTAINED ADDITION OF RS.3,10,40,816/-. 3. THAT WITHOUT ANY PREJUDICE TO THE AFORESAID GROU ND OF APPEAL, THE APPELLANT APPEALS THAT WITHOUT APPRECIATING THE FACTS OF THE CASE IN CORRECT PERSPECTIVE, THE LD. CIT(A) APPLIED THE PROVISIONS OF S.68 OF THE I.T. ACT, 196 1 TO THE APPELLANTS CASE AND THEREBY SUSTAINED THE ADDITION TO THE EXTENT OF RS.3,10,40, 816/- AND, THEREFORE, THE ADDITION SO SUSTAINED IS BAD IN LAW. THE APPELLANT APPEALS FOR DELETION OF THE SUSTAINED ADDITION OF RS.3,10,40,816/-. 4. THAT WITHOUT ANY PREJUDICE TO THE AFORESAID GROU NDS OF APPEAL, THE APPELLANT APPEALS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. AO GROSSLY ERRED IN APPLYING THE PROVISIONS OF S.69C OF THE I.T. ACT TO THE APPELLANTS CASE. IN THE PRESENT CASE, PURCHASES OF GOODS WERE MADE ON CREDIT AND PA YMENTS FOR THE SAME WERE MADE BY CHEQUES. THE AMOUNTS REMAINING PAYABLE AS ON 31/ 03/07 TO THE CREDITORS FOR SUCH GOODS WERE ASSESSED U/S 69C. THE APPELLANT APPEALS THAT THE PROVISIONS OF S.69C COULD BE INVOKED IF THE APPELLANT HAD FAILED TO EXP LAIN SOURCE FOR PAYMENT OF THE AFORESAID PURCHASES. IN THE PRESENT CASE, THERE BEI NG NO DISPUTE REGARDING THE SOURCE FOR PAYMENT OF THE PURCHASES, THE LD. AO GROSSLY ER RED IN APPLYING THE PROVISIONS OF S.69C. THE APPELLANT VERY HUMBLY SUBMITS THAT ALTHOUGH THE LD. CIT(A) WAS CORRECT IN OBSERVING THAT THE PROVISIONS OF S.69C WERE NOT APP LICABLE TO THE APPELLANTS CASE YET HE GROSSLY ERRED IN APPLYING THE PROVISIONS OF S.68 TO THE APPELLANTS CASE AND THEREBY IN SUSTAINING THE ADDITION TO THE EXTENT OF RS.3,10 ,40,816/-. THE APPELLANT APPEALS THAT REASON FOR THE ERRONEOUS APPLICATION OF S.68 BY THE LD. CIT(A) WAS THAT THE AMOUNT OF RS.3,10,40,816/- DID NOT REPRESENT RECEIPT/S OF CAS H/CHEQUES/BANKERSCHEQUES AS CREDITS/LOANS, BY THE APPELLANT. THE APPELLANT APPE ALS FOR DELETION OF THE SUSTAINED ADDITION OF RS.3,10,40,816/-. 5. THAT WITHOUT ANY PREJUDICE TO THE AFORESAID GROU NDS OF APPEAL THE APPELLANT APPEALS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. AO GROSSLY ERRED IN OBSERVING THAT THE ASSESSEE FAILED TO PROVE IDENTI TY OF THE PARTIES FROM WHOM PURCHASES SHOWN TO HAVE BEEN MADE AND GENUINENESS O F THE TRANSACTIONS CARRIED OUT WITH ALL THE PARTIES, IN THE PARA NO.6.P. AT THE P G.NO.5 OF THE ASSESSMENT ORDER. WHILE SO OBSERVING THE LD. AO FAILED TO APPRECIATE THE FO LLOWING RELEVANT FACTS OF THE CASE (A) THAT THE APPELLANT HAD PURCHASED GOODS FROM ELEVEN PARTIES AS BACK AS IN THE FINANCIAL YEAR 2006-07 AND AFTER LAPSE OF ABOUT THREE YEARS O N 14/10/2009 THE AO SENT LETTERS U/S 133(6) TO TEN OF THEM AT THE ADDRESSES INFORMED BY THE APPELLANT. FURTHER FOR THE FIRST TIME ON 30/10/2009 THE LD. AO ORDERED THE APP ELLANT (I) TO FURNISH NEW ADDRESSES OF FIVE OF THE PARTIES (AS THE POSTMAN CONCERNED HAD WRITTEN AS LEFT OR AS NOT KNOWN ON THE ENVELOPE S PERTAINING TO THESE FIVE PARTIES), ITA NO. 995/AHD/12 A.Y. 07-08 (MUKESH ASHMAL BOKAD IA VS. ITO) PAGE 3 (II) TO PRODUCE ONE OF THE PARTIES (WHO HAD REFUSED TO A CCEPT THE ENVELOPE), (III) TO FOLLOW UP TWO OF THE PARTIES (WHO HAD NOT REPLIE D TO THE AFORESAID LETTERS0. THE APPELLANT VERY HUMBLY APPEALS THAT WHILE ORDERI NG AS ABOVE, THE LD. AO FAILED TO APPRECIATE THAT APPELLANT HAD FURNISHED THE ADDRESS ES WHICH WERE AVAILABLE WITH HIM (ON THE BILLS RECEIVED IN THE F.Y. 2006-07) AND SIN CE LONG BACK HE HAD NOT BEEN HAVING ANY TRANSACTION WITH THE AFORESAID PARTIES. (B) THAT THE LD. AO FAILED TO APPRECIATE THE FACTS THAT THE PURCHASES WERE SUPPORTED BY PURCHASE BILLS (TERMED AS TAX INVOICES) EACH OF WHI CH WAS BEARING VAT (VALUE ADDED TAX) REGISTRATION NO. & DATE OF REGISTRATION AND AL SO SHOWING THE FACT THAT VAT @ 4% OF THE AMOUNT OF GOODS WAS CHARGED THEREIN. FURTHER THE LD. AO FAILED TO APPRECIATE THE FACT THAT PAYMENTS FOR SUCH PURCHASES WERE MADE BY CHEQUES PARTLY IN THE YEAR UNDER CONSIDERATION AND REMAINING IN SUBSEQUENT YEA R/S (THE LAST OF THE PAYMENTS WAS MADE ON 07/02/2009) (C) THAT UNDISPUTEDLY FACTS WERE THAT THERE WAS NO OPEN ING STOCK OF GOODS AND THAT DURING THE YEAR UNDER CONSIDERATION, THERE WERE SALES OF G OODS OF RS.4,46,60,565.88. IN VIEW OF THESE FACTS, IT GOES WITHOUT SAYING THAT IN ORDE R TO EFFECT SUCH SALES, THERE HAD TO BE PURCHASES OF GOODS DURING THE YEAR UNDER CONSIDERAT ION, THERE WERE PURCHASES OF GOODS OF RS.4,50,40,750.37 WHICH INCLUDED THE PURCH ASES MADE FROM THE AFORESAID PARTIES (CREDITORS FOR GOODS). FURTHER, THE AUDITED TRADING A/C AND THE BOOKS OF A/CS SHOWED PURCHASES OF RS.4,50,40,750.37. IN VIEW OF T HESE FACTS COUPLED WITH THE FACTS STATED IN SUB-PARA NOS.(A) AND (B) HEREINABOVE, THE LD. AO DIDNT HAVE ANY VALID REASON FOR OBSERVING THAT THE ASSESSEE FAILED TO P ROVE IDENTITY OF THE PARTIES FROM WHOM PURCHASES SHOWN TO HAVE BEEN MADE AND GENUINEN ESS OF THE TRANSACTIONS CARRIED OUT WITH ALL THE PARTIES. THE APPELLANT APPEALS THAT THE LD. CIT(A) ALSO FAIL ED TO APPRECIATE THE RELEVANT FACTS OF THE APPELLANTS CASE AND SUSTAINED THE ADDITION TO THE EXTENT OF RS.3,10,40,816/- MERELY ON SURMISES AND ASSUMPTIONS. THE APPELLANT A PPEALS FOR DELETION OF THE SUSTAINED ADDITION OF RS.3,10,40,816/-. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. AO ERRED IN CHARGING INTEREST U/S 234B & 234C OF THE I.T. ACT, 1961 AND THE LD. CIT(A) DID NOT JUSTIFY IN SUSTAINING THE SAME. 7. THE APPELLANT CRAVES OPPORTUNITY FOR FURNISHING ANY OTHER GROUNDS OF APPEAL ON OR BEFORE THE DATE OF APPEAL HEARING. 2. ASSESSEE HAS RAISED SEVEN GROUNDS OF APPEAL, OUT OF WHICH, GROUND NOS.1 TO 5 RELATE TO THE ADDITION OF RS.3,10,40,816/- SUS TAINED BY THE CIT(A) APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT WHEREAS ASS ESSING OFFICER MADE ADDITIONS BY INVOKING THE PROVISIONS OF SECTION69C OF THE ACT AND GROUND NOS. 6 & 7 ARE GENERAL IN NATURE. ITA NO. 995/AHD/12 A.Y. 07-08 (MUKESH ASHMAL BOKAD IA VS. ITO) PAGE 4 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE CARR IES ON BUSINESS AS SOLE PROPRIETOR IN THE NAME OF M/S. MANAK STEEL WHICH DEALS IN TRAD ING OF METALS. RETURN OF INCOME FOR A.Y.2007-08 WAS FILED BY ASSESSEE ON 31 ST OCTOBER, 2007 DECLARING TOTAL INCOME OF RS.2,83,520/-. ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 22.08.20 08. ASSESSEE HAS SHOWN TOTAL TURNOVER AT RS.4,46,60,566/-, GROSS PROFIT A T RS.5,64,828/- AND NET PROFIT AT RS. 2,94,202/-. ASSESSEES BOOKS OF ACCOUNT ARE AU DITED U/S.44AB OF THE INCOME TAX ACT AND QUANTITATIVE DETAILS HAVE BEEN M AINTAINED BY THE ASSESSEE. ON GOING THROUGH THE BALANCE SHEET OF ASSESSEES BU SINESS CONCERN M/S. MANAK STEEL, ASSESSING OFFICER CAME THROUGH THE LIST OF S UNDRY CREDITORS HAVING 11 NAMES TOTALING TO RS.3,34,56,223/-. IN ABSENCE OF CONFIRMATION LETTERS FROM THE ALLEGED SUNDRY CREDITORS, ASSESSING OFFICER TOOK A VIEW THAT AS THE ASSESSEE HAD FAILED TO PROVE THE IDENTITY OF SUNDRY CREDITORS AN D GENUINENESS OF TRANSACTIONS CARRIED OUT WITH THESE PARTIES, HE THEREFORE INVOKE D THE PROVISIONS OF SECTION 69C OF THE INCOME TAX ACT AND CONSEQUENTLY BOOK RES ULT OF THE ASSESSEE WERE PARTLY REJECTED AND SUNDRY CREDITORS OF RS.3,34,56, 223/- SHOWN IN BALANCE SHEET AS ON 31.03.2007 WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY TREATING THEM AS A FAKE LIABILITY. 4. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE THE CIT (A) AND SUBMITTED DETAILS OF LEDGER ACCOUNTS WITH ADDRESSES OF ALL TH E 11 PARTIES. HOWEVER CIT(A) GAVE RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.24, 15,407/- RELATING TO CREDIT BALANCE APPEARING IN THE NAME OF ONE OF THE 11 PART IES NAMED AS M/S. K.S.B. ENTERPRISE AND SUSTAINED THE REMAINING ADDITION OF RS.3,10,40,816/- MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE T RIBUNAL. HOWEVER, REVENUE HAS NOT FILED ANY CROSS OBJECTION AGAINST T HE RELIEF GIVEN BY THE CIT(A). ITA NO. 995/AHD/12 A.Y. 07-08 (MUKESH ASHMAL BOKAD IA VS. ITO) PAGE 5 5.1 LD. A.R. HAS FILED DETAILED SUBMISSIONS WITH SU PPORTING EVIDENCES IN HIS PAPER BOOK ON 17.08.2015. LD. A.R. ALSO SUBMITTED THAT ASSESSING OFFICER HAS MADE THE ADDITION BY INVOKING SECTION 69C OF THE AC T ON ACCOUNT OF UNEXPLAINED EXPENDITURE WHEREAS LD. CIT(A) SUSTAINE D THE ADDITION BY INVOKING SECTION 68 BY TREATING THE UNEXPLAINED SUNDRY CREDI TORS AS UNEXPLAINED CREDITS. LD. CIT(A) HAS HELD IN HIS ORDER THAT PROVISIONS O F SECTION 69C OF THE ACT ARE NOT APPLICABLE IN THIS CASE BECAUSE SECTION 69C COV ERS EXPENSES NOT RECORDED IN THE BOOKS AND THE ADDITION IN RESPECT OF BOGUS EXPE NSES COULD BE MADE U/S.37(1) OF THE ACT. HOWEVER, CIT(A) DEEMED FIT TO APPLY S ECTION 68 OF THE ACT FOR A UNEXPLAINED CREDITS. 5.2 ON OTHER HAND, LD. D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE YEAR UNDER APPEA L, ASSESSEE HAS SHOWN TOTAL TURNOVER OF RS.4,46,60,566/- AND PURCHASE OF RS.4,3 1,84,151/-. ASSESSING OFFICER HAS NOT RAISED ANY DOUBT ON THE SALES TURNO VER OF THE ASSESSEE AND NOR HAS CHALLENGED THE GROSS PROFIT OF THE ASSESSEE. A SSESSING OFFICER MADE COMPLETE ADDITION OF SUNDRY CREDITORS LIABILITY APP EARING IN THE BALANCE SHEET AS ON 31.03.2007 OF THE FOLLOWING PARTIES: 1. K.S.B. ENTERPRISE RS.24,15,407/- 2. JUGRAJ TEJRAJ METALS RS.29,41,299/- 3. KINJAL ENTERPRISE RS. 1,41,881/- 4. ASTAMANGAL METAL PVT. LTD. RS.60,33,840/- 5. VAMAN ENTERPRISE RS.26,35,504/- 6. KEHNA CORPORATION RS. 3,02,100/- 7. SHAKSHI TRADERS RS.14,02,200/- 8. NIRA TRADERS RS.26,91,387/- 9. CHIRAG METAL & ALLOYS RS.37,19,115/- 10. LANDMARK ENGINEERING RS.53,19,523/- 11. MAHENDRA METAL CO. RS.58,53,967/- TOTAL RS.3,34,56,223/- 6.1 DURING COURSE OF ASSESSMENT PROCEEDINGS, ON THE BASIS OF ADDRESSES PROVIDED BY ASSESSEE, ASSESSING OFFICER SENT LETTER S U/S.133(6) OF THE ACT TO THE ITA NO. 995/AHD/12 A.Y. 07-08 (MUKESH ASHMAL BOKAD IA VS. ITO) PAGE 6 ABOVE SAID PARTIES ON 14.10.2009. BUT, IN REPLY TO THE LETTERS U/S.133(6) OF THE ACT, SOME OF THE PARTIES WERE REPORTED TO HAVE LEFT THE PLACE OF BUSINESS, SOME REFUSED TO ACCEPT THE LETTER AND SOME WERE SHOWN AS NOT KNOWN. DUE TO THIS VERY REASON, ASSESSING OFFICER MADE ADDITION U/S.69 C OF THE ACT TREATING IT AS UNEXPLAINED EXPENDITURE. DURING APPELLATE PROCEEDI NG BEFORE THE CIT(A), COPIES OF LEDGER ACCOUNTS FOR F.Y. 2006-07 AND 2007 -08 OF ALL THE 11 PARTIES ALONG WITH COPIES OF BANK STATEMENTS, PURCHASE BILL S AND QUANTITATIVE DETAILS WERE FILED BY THE ASSESSEE AND THEREAFTER REMAND RE PORT WAS CALLED FOR FROM THE ASSESSING OFFICER AND THE SAME WAS FURNISHED ON 15. 02.2012 AND AFTER EXAMINING THE SAME, CIT(A) ACCEPTED THE SUNDRY CRED ITOR OF RS.24,15,407/- AS GENUINE APPEARING IN THE NAME OF M/S. K.S.B. ENTERP RISE AND CONFIRMED THE BALANCE ADDITION OF RS.3,10,40,816/-. 6.2 FROM THE PERUSAL OF FACTS ON RECORD, IT CAN BE SEEN THAT OUT OF TOTAL PURCHASES MADE BY THE ASSESSEE AMOUNTING TO RS.4,50 ,40,750/- PURCHASES OF RS.18,56,599/- WERE FROM THREE OTHER PARTIES [NOT A PPEARING IN THE LIST MENTIONED (SUPRA)] WERE PAID DURING THE YEAR AND OU T OF THE REMAINING PURCHASE AMOUNT I.E. 4,31,84,151/- (TOTAL PURCHASE RS.4,50,4 0,750/- RS.18,56,599/-), THE UNPAID SUNDRY CREDITORS REMAINING AT THE END OF THE YEAR WAS RS.3,34,56,223/-, WHICH MEANS THAT RS.97,27,928/- (RS.4,31,84,151/- RS.3,34,56,223/-) WAS PAID BY THE ASSESSEE THROUGH BANKING CHANNEL TO THE ALLE GED SUNDRY CREDITORS IN TOTAL. 6.3 FURTHER, FROM THE PERUSAL OF ASSESSMENT ORDER, IT IS CLEAR THAT ASSESSING OFFICER HAS ALLOWED PURCHASES TO THE TUNE OF RS.1,1 5,84,527/-, WHICH WERE PAID TO VARIOUS PARTIES FROM WHOM ASSESSEE MADE PURCHASE S DURING THE YEAR. AFTER THE PAYMENT OF RS.1,15,84,527/- OUTSTANDING BALANCE REMAINED TO BE PAID ON 31 ST MARCH, 2007, WHICH MEANS THAT ASSESSING OFFICER HAS TREATED ALL THESE PARTIES AS GENUINE SUPPLIERS TO WHOM SOME PAYMENTS HAVE BEEN M ADE DURING THE YEAR. IF IN ANY CASE, ASSESSING OFFICER HAD COME TO A CONCL USION THAT CERTAIN SUPPLIER IS A BOGUS PARTY, THEN THE COMPLETE PURCHASES MADE FRO M SUCH BOGUS SUPPLIERS ITA NO. 995/AHD/12 A.Y. 07-08 (MUKESH ASHMAL BOKAD IA VS. ITO) PAGE 7 SHOULD HAVE BEEN DISALLOWED BY HIM. IN THE PRESENT CASE, ASSESSING OFFICER HAS ALLOWED THE PURCHASES TO THE EXTENT THEY HAVE BEEN PAID AND DISALLOWED THE PURCHASES TO THE EXTENT WHICH HAVE NOT BEEN PAID. ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THE FACT THAT ASSESSEE HAS SUBMITT ED THE LEDGER ACCOUNT OF ALL THE 11 PARTIES FOR THE RELEVANT ASSESSMENT YEAR AS WELL AS FOR THE NEXT FINANCIAL YEAR DURING WHICH BALANCE PAYMENT OF THE OUTSTANDIN G LIABILITIES WERE MADE THROUGH BANK. HERE, WE CAN TAKE EXAMPLE OF ONE OF THE PARTIES AMONGST THE LIST OF 11 PARTIES IN THE NAME OF M/S. LANDMARK ENGINEER ING FROM WHOM ASSESSEE MADE PURCHASES DURING THE YEAR. OUTSTANDING LIABIL ITY IN THE NAME OF THIS PARTY ON 31.03.2007 STOOD AT RS.53,19,523/- AND THIS OUTS TANDING AMOUNT REPAID IN FULL BY THE ASSESSEE DURING THE FINANCIAL YEAR 2007 -08. AS SUBMITTED BY LD. A.R. THAT IN CASE OF OTHER PARTIES ALSO THE OUTSTANDING LIABILITY STANDING UNDER THE HEAD SUNDRY CREDITORS ON 31.03.2007 HAVE BEEN PAID IN THE FOLLOWING YEARS BY ACCOUNT PAYEE CHEQUES. 6.4 FURTHER, ON ONE HAND, ASSESSING OFFICER IS ACCE PTING THE SALES TURNOVER OF THE ASSESSEE, SUNDRY DEBTORS RECEIVABLE AS ON 31.03 .2007, GROSS PROFIT, STOCK RECORDS AND HAS NOT BROUGHT OUT ANY IRREGULARITY IN THE BOOKS OF ACCOUNT AND ON OTHER HAND, HAS MADE ADDITION FOR UNEXPLAINED SUNDR Y CREDITORS OF RS.3,34,56,223/- [ADDITION SUSTAINED TO RS.3,10,40, 816/- BY LD. CIT(A) ] THEREBY MAKING A SITUATION, IN WHICH GROSS PROFIT DECLARED BY ASSESSEE AT 1.26% WILL RISE TO APPROXIMATE 70% WHICH IS PRACTICALLY NOT JUSTIFI ABLE. IN VARIOUS JUDICIAL PRECEDENCES, NORMALLY, WHEN THE ASSESSING OFFICER T REATS THE PURCHASE AS BOGUS PURCHASE OR WHEN THE BOOKS OF ACCOUNTS ARE REJECTED , THEN GROSS PROFIT RATE IS ESTIMATED AT A LITTLE HIGHER RATE TO COVER UP THE S ITUATION OF BOGUS PURCHASES APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. HOWEVER, IN THE CASE UNDER APPEAL, THIS IS NOT THE SITUATION BECAUSE BOOKS OF ACCOUNT HAVE NOT BEEN FULLY REJECTED, NONE OF THE PARTIES HAS PREVIOUSLY BEEN P ROVED AS BOGUS, PART OF PAYMENTS MADE TOWARDS THE PURCHASES HAVE ALREADY BE EN ALLOWED BY THE ASSESSING OFFICER AND NO SPECIFIC WORKING HAS BEEN MADE BY THE ASSESSING ITA NO. 995/AHD/12 A.Y. 07-08 (MUKESH ASHMAL BOKAD IA VS. ITO) PAGE 8 OFFICER TO TREAT A PARTICULAR PURCHASE FROM A SUPPL IER AS BOGUS PURCHASE AND FURTHER THE OUTSTANDING PURCHASES AT THE END OF THE YEAR HAVE BEEN SUBSEQUENTLY PAID BY BANKING CHANNEL AND NOTHING CONTRARY TO THI S FACT OF PAYMENT BY BANKING CHANNEL HAS BEEN BROUGHT ON RECORD BEFORE U S. IN THIS SITUATION, IT IS NOT JUSTIFIED ON THE PART OF ASSESSING OFFICER TO TREAT THE SUNDRY CREDITORS OUTSTANDING AT THE END OF THE YEAR AS UNEXPLAINED A ND ACCORDINGLY, THE ADDITION OF RS.3,10,40,816/- SUSTAINED BY THE CIT(A) IS DELE TED AND THE APPEAL OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 29 TH OCTOBER, 2015 SD/- SD/- ( RAJPAL YADAV) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ! '# $ / CONCERNED CIT 4. $ - / CIT (A) 5. %&' (('# , '# , ! / DR, ITAT, AHMEDABAD 6. '+, / GUARD FILE. BY ORDER/ , / '# , !