JHAVERI,J. - (1.) By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has reversed the finding of the CIT (A) confirming the order of the A.O. and allowed the appeal preferred by the assessee.
(2.) While admitting this appeal, the Court framed the following substantial questions of law : "(1) Whether in the facts and circumstances of the case the ITAT has not acted perversely in deleting the additions without appreciating the proviso to Section 69C and CBDT's circular dated 23.12.1998 ? (2) Whether in the facts and circumstances of the case, the ITAT has not acted perversely in relying the books of accounts when the same were rejected by invoking provisions of section 145(3) of the Act as the assessee was unable to explain the purchases and the day to day quantitative tally of goods consumed was also not maintained ? (3) Whether the ITAT was justified in upholding the action of CIT (A) in directing to adjust the MAT credit before charging the interest u/s 234B and 234C of the IT Act ?"
(3.) The brief facts of the case are that the assessee firm is engaged in the business of precious and semi precious stones and it is a 100% exporter. During the course of assessment proceedings the AO has noticed that the assessee was not maintaining quantitative details of day to day purchases and manufacturing of the items. Further on verification it was also noticed by him that the purchases was made from M/s. Vinayak Overseas and M/s. JVH Gems. The purchases from above parties were established to be bogus after making in depth enquiries by the AO. During the course of assessment the AO has recorded Statements of concerned parties were established to be bogus after making in depth enquiries by the AO. During the course of assessment proceeding it has been gathered that the assessee has failed to produce the owners of the two concerns. The reasons like nonavailability of the said two suppliers at the given addresses, non production of two suppliers by the assessee in spite of various opportunities granted, statement of Sh. Mohan Prakash Sharma Power of Attorney holder of M/s. Vinayak Overseas stating of giving accommodation entireties only and nature and volume of transaction appearing in their bank accounts leads the AO to the conclusion that the purchases were bogus.;