Case Law Details
Brief of the Case
ITAT Ahmadabad held In the case of Mukesh Ashmal Bokadia vs. ITO that AO is not justified to make addition on account of purchases as this is not the situation because books of account have not been fully rejected, none of the parties has previously been proved as bogus, part of payments made towards the purchases have already been allowed by the Assessing Officer and no specific working has been made by the Assessing Officer to treat a particular purchase from a supplier as bogus purchase. Further the outstanding purchases at the end of the year have been subsequently paid by banking channel and nothing contrary to this fact of payment by banking channel has been brought on record before us.
Facts of the Case
The assessee carries on business as sole proprietor in the name of M/s. Manak Steel which deals in trading of metals. Return of income for A.Y.2007-08 was filed by assessee on 31st October, 2007 declaring total income of Rs.2,83,520/-. Assessee’s case was selected for scrutiny and notice u/s 143(2) of the Act was issued on 22.08.2008. Assessee has shown total turnover at Rs.4,46,60,566/-, gross profit at Rs.5,64,828/- and net profit at Rs. 2,94,202/-. Assessee’s books of account are audited u/s.44AB of the Income Tax Act and quantitative details have been maintained by the assessee. On going through the balance sheet of assessee’s business concern M/s. Manak Steel, Assessing Officer came through the list of sundry 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 and genuineness of transactions carried out with these parties, he therefore invoked the provisions of Section 69C of the Income Tax Act and consequently book result 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.
Contention of the Assessee
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Very good and sensible decision by ITAT, Ahmedabad. All Legal costs + harassment + interest @ 24% pa on deposit of tax by assessee if any must be recovered from AO.Even CIT (A) is no hope. when officers deem purchase to be Bogus then how assessee sold the material. did he manufacture goods out of Bogus Bill paper?. If purchases are rejected then sales must also be done away. AO must have applied mind as doing such a harm to business confidence was uncalled for. No Business can make > 300% profit when turnover is in crores. The assessee was not selling vegetables.Such officers exist in Mumbai also who without applying mind make illegitimate additions. NAMO government must check such officers and make them responsible if there are frequent negative orders.