Asstt. CIT v. Amar Mining Co.

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The Tax Publishers2009 TaxPub(DT) 1380 (Ahd-Trib) : (2009) 029 (II) ITCL 0167 : (2009) 121 ITD 0273 : (2009) 123 TTJ 0473 : (2009) 024 DTR 0139 Asstt. CIT v. Amar Mining Co. INCOME TAX ACT, 1961 Income from undisclosed sources- Addition under section 69-Unexplained purchases from bogus parties Assessee-company was engaged in business of manufacture and sale of crushed stone aggregates, viz., rubble, kapchi, grit, etc. by declaring low gross profit. AO called for details of purchases exceeding Rs. 5 lakhs and asked assessee to furnish confirmations/details of five parties. Assessee was unable to provide full information. AO found that all parties were not found existing at addresses given by assessee and addresses given in their bank accounts were different. Further, payments alleged to have been made by account-payee cheques could not be verified and all parties had accounts in same bank and payments were made to parties on same dates and a common person had withdrawn amounts immediately after deposits. AO also noticed that signatures on confirmations produced by assessee in respect of two parties were quite different from introduction forms obtained from bank and persons who introduced these parties to bank stated that they did not know parties. He was not satisfied that genuineness of purchases from five parties had not been established and assessee had inflated purchases and reduced profits and disallowed entire amount of purchases made from five parties. CIT (A) deleted addition. *Held:* Once it was established that purchases were bogus and assessee had not proved purchases from alleged parties to whom payments were alleged to had been made, in such circumstances, CIT(A) was not justified in deleting addition without ascertaining veracity of claim. Hence, Order of CIT (A) was to be set aside and matter was remanded to AO. Income Tax Act, 1961 Sections 69 & 254(1) Case Law Analysis:CIT v. Assam Travels Shipping Service [1993] 199 ITR 1/ 67 Taxman 269 (SC); Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC) and Indian Woollen Carpet Factory v. ITAT [2003] 260 ITR 658/[2002] 125 Taxman 763 (Raj.)followed. Saurashtra Packaging (P.) Ltd. v. CIT [1993] 204 ITR 443 (Guj.) and Dy. CIT v. Adinath Industries [2001] 252 ITR 476/[2002] 120 Taxman 822 (Guj.)distinguished. Decision: Matter remanded to AO. A.Y. 1998-99 Asstt. CIT v. Amar Mining Co. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2009 TaxPub(DT) 1380 (Ahd-Trib) : (2009) 029 (II) ITCL 0167 : (2009) 121 ITD 0273 : (2009) 123 TTJ 0473 : (2009) 024 DTR 0139

Asstt. CIT v. Amar Mining Co.

INCOME TAX ACT, 1961

Income from undisclosed sources- Addition under section 69-Unexplained purchases from bogus parties

Assessee-company was engaged in business of manufacture and sale of crushed stone aggregates, viz., rubble, kapchi, grit, etc. by declaring low gross profit. AO called for details of purchases exceeding Rs. 5 lakhs and asked assessee to furnish confirmations/details of five parties. Assessee was unable to provide full information. AO found that all parties were not found existing at addresses given by assessee and addresses given in their bank accounts were different. Further, payments alleged to have been made by account-payee cheques could not be verified and all parties had accounts in same bank and payments were made to parties on same dates and a common person had withdrawn amounts immediately after deposits. AO also noticed that signatures on confirmations produced by assessee in respect of two parties were quite different from introduction forms obtained from bank and persons who introduced these parties to bank stated that they did not know parties. He was not satisfied that genuineness of purchases from five parties had not been established and assessee had inflated purchases and reduced profits and disallowed entire amount of purchases made from five parties. CIT (A) deleted addition. Held: Once it was established that purchases were bogus and assessee had not proved purchases from alleged parties to whom payments were alleged to had been made, in such circumstances, CIT(A) was not justified in deleting addition without ascertaining veracity of claim. Hence, Order of CIT (A) was to be set aside and matter was remanded to AO.

Income Tax Act, 1961 Sections 69 & 254(1)

Case Law Analysis:CIT v. Assam Travels Shipping Service [1993] 199 ITR 1/ 67 Taxman 269 (SC); Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC) and Indian Woollen Carpet Factory v. ITAT [2003] 260 ITR 658/[2002] 125 Taxman 763 (Raj.)followed.

Saurashtra Packaging (P.) Ltd. v. CIT [1993] 204 ITR 443 (Guj.) and Dy. CIT v. Adinath Industries [2001] 252 ITR 476/[2002] 120 Taxman 822 (Guj.)distinguished.

Decision: Matter remanded to AO.
A.Y. 1998-99

Asstt. CIT v. Amar Mining Co.