Smt. Lata Garg Vs DCIT (ITAT Delhi)
Facts- The assessee is an individual and derived income from salary, income from house property, income from business or profession and income from other sources. It was alleged that there were certain bogus purchases. Accordingly, AO alleged adding the same to the total income of the assessee.
Conclusion- It is an admitted fact that the sales declared by the assessee has not been disturbed. The assessment order indicates that letters were served upon certain parties which proves their existence. The books of account were also audited and auditors have not given any adverse remarks. All the payments have been made through banking channels. The assessee had produced the stock register showing relevant entries of the items purchased and issued for consumption in job work and the items were tallying and no discrepancy in the stock was found at the time of survey. Under these circumstances, we are of the considered opinion that disallowance of 20% of the purchases appears to be on the higher side especially when some of the parties to whom letters were issued were served and the payments have been made through banking channel.
Considering the totality of the facts and circumstances of the case and in the interest of justice, the disallowance of 2% of the total purchases under the facts and circumstances of the case, in our opinion, will meet the ends of justice.
the Hon’ble Delhi High Court in the case of CIT vs Sonal Constructions has accepted the theory of benefit of telescoping. Accordingly, it is held that in case there is an addition on account of bogus purchases, such additional income should be available to the assessee to meet the expenses towards commission.
FULL TEXT OF THE ORDER OF ITAT DELHI
ITA.No.9145/Del./2019 filed by the Assessee is directed against the order dated 30.09.2019 of the Ld. CIT(A)-23, New Delhi, relating to the A.Y. 2011-2012. ITA.No.7187/Del./ 2019 filed by the assessee is directed against the order dated 25.06.2019 of the Ld. CIT(A)-23, New Delhi, relating to the A.Y. 2012-13. For the sake of convenience, both the appeals were heard together and are being disposed of by this common order.
ITA.No.9145/Del./2019 – A.Y. 2011-12 :
2. Facts of the case, in brief, are that the assessee is an individual and derived income from salary, income from house property, income from business or profession and income from other sources. She filed her return of income on 17.09.2011 declaring total income of Rs.23,75,500/-. The return was processed under section 143(1) of the I.T. Act, 1961. A search under section 132 of the Act was conducted on 28.02.2017 at the residential premises of the assessee at House No.128, Sector-16, Faridabad, Haryana from where certain papers/documents belonging to the assessee were fond and seized. Notice under section 153A of the Act was issued on 15.09.2017 and the assessee in response to the same filed return of income under section 153A on 04.10.2017 declaring total income of Rs.23,75,500/-. The A.O. thereafter issued notice under section 143(2) on 25.01.2018. Subsequently notice under section 142(1) along with a questionnaire was also issued to the assessee asking her to file the requisite details and clarifications which the assessee complied with.
2.1. During the course of assessment proceedings the A.O. noted that the assessee, Smt. Lata Garg, Prop, of M/s Automek Systems & Autosystem Services has shown purchases of Rs.1,90,43,829/- from the following parties during the year under consideration.
