TaxTMI 
TaxTMI 
2013 (4) TMI 466
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....d the order of the Assessing Officer. [4] It is, therefore, prayed that the order of the Ld. CIT(A)-III, Surat may be set-aside and that of the Assessing Officer restored." ITA No.3134/Ahd/2008[Assessee] "[1] As regards addition of Rs.44,56,914/- on account of purchases being considered as bogus. 1.1 The Ld. CIT(A) had erred on the facts of the case in deleting the addition to the extent of 75% and restricting the amount of addition to 25% of the total purchase. [2] The assessee craves leave to add, amend, modify alter or delete any of the grounds at the time of hearing." 2. Adverting first to ground no.1 in the appeal of the Revenue and that of the assessee, facts, in brief , as per relevant orders are that return declaring income of Rs.36,29,113/- was filed on 17-11-2003 by the assessee, processing man made fabrics The assessment was initially completed on 30-09-2005 u/s 143(3) of the Income-tax Act , 1961 [hereinafter referred to as the "Act"] determining the income of Rs.39,24,230/ -.The said assessment was subsequently reopened u/s 147 of the Act with the issue of a notice u/s 148 of the Act on 16.5.2006 since the assessee-company was found to have claimed de....
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.... having made any bogus purchases from the aforesaid parties; instead it was submitted that material as described in the purchase bills was duly received from these suppliers . All the purchases made by the company were in the regular course of business and payments had been made by a/c payee cheques. Inter alia, copy of account of the suppliers as per the books of the company was also submitted .It was further pointed out that no cash had been received back by the assessee on account of payments, as stated by the aforesaid suppliers nor there was any evidence to that effect. The assessee also sought copy of statements of the aforesaid suppliers and their cross-examination. On the request on behalf of the assessee, Shri Rohit Panwala was examined on 18/10/2007 and also allowed to be cross examined. In his deposition, taken in the presence of Shri S.K.Kabra, C.A. the authorized representative, Shri Panwala reiterated that neither he nor his family members ever carried on business in colour and chemicals; rather he issued only accommodation(bogus) bills to parties who approached him. He explained in detail the modus operandi which go like this- parties who are in need of accommodation....
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....ad purchased color and chemicals and the material was received by it which was supported by challans and inward stamp of security in-charge at the factory gate. The payment for the same was made by a/c payee cheques. The appellant would make purchases from the supplier or his representative who would visit the office of the appellant and offer the material for sale. Therefore, it was never known if the challans or invoices were fake or otherwise. Further, Shri Panwala had also categorically stated that he did not know the appellant or any of his representatives. The Id. AR produced copies of inward challan receipt and invoices in support of his claim. I have considered the submissions and gone through the details filed by the appellant. It is seen that the AO has been able to establish that Shri Panwala was only a name lender and was only issuing bills and earning commission after discounting the cheques which were deposited in his bank account but it is also a fact that Shri Panwala during his cross examination by the appellant did not recognise either the partners of the firm or the purchase Manager who would be the only functionaries to whom the pay back would have been made.....
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....tion of the disallowance of Rs.11,142/- on account of commission while the assessee disputed the disallowance upheld by the ld. CIT(A) to the extent of Rs.11,14,250/-. The learned DR supported the order of the AO while the learned AR on behalf of the assessee pleaded that disallowance upheld by the ld. CIT(A) is also required to be deleted in the light of view taken in the following decisions in identical circumstances : I. Akruti Dyeing & Printing Mills Pvt. Ltd. (ITA No.2551 & 2752/AHD/2006, Order dated:26/10/2007) II. Shalu Dyeing & Printing Mills Pvt. Ltd. (ITA No.1491 & 1492/AHD/2008, Order dated: 11/07/2008) III. Dada Silk Mills (ITA No. 1896/AHD/2007, Order dated: 11/09/2008); and IV. Suman Silk Mills Pvt. Ltd. (ITA Nos. 3794 & 3894\AHD\2008, Order dated: 16/12/2010). 4.1 The ld. AR further pointed out that decision of the ITAT in Akruti Dyeing & Printing Mills Pvt. Ltd, has been upheld by the Hon'ble High Court vide their order dated 28/10/2009 in Tax Appeal No.1218 of 2008 . 5. We have heard both the parties and gone through the facts of the case. We find that the ITAT in their decision dated 26/10/2007 while adjudicating an identical issue in the case of....
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....alu Dyeing & Print ing Mills Pvt . Ltd.(supra) ,Dada Silk Mills (supra) , and Suman Silk Mills Pvt . Ltd. (supra) as also in Sangita M Patel in ITA no. 4320/AHD/2007, dated:29/02/2008 ; Avishkaar Processing Mills (P) Ltd. in ITA nos. 3589,3590 & 3591/AHD/2008, dated: 03/07/2009 & in ITA no.2687/AHD/2006, dated:28/08/2009, wherein similar additions were deleted. I t may be pointed out that decision of the ITAT in Akruti Dyeing & Printing Mills Pvt . Ltd. has been upheld by the Hon'ble High Court vide their order dated 28/10/2009 in Tax Appeal No.1218 of 2008 when it was concluded that no substantial quest ion of law arose and that the Tribunal on appreciation of the facts decided the issue correctly. 5.2 In the case of Suman Silk Mills Pvt . Ltd. in ITA Nos. 3794 & 3894/Ahd. /2008, a co-ordinate Bench in their order dated 16/12/2010, dealt with an identical issue exhaustively as under:- "12. We have heard the rival submissions and perused the material on record. In our considered view the assessment order passed by the AO is vitiated on account of violation of principles of natural justice. Once Shri Rohit Panwala has stated through an affidavit that he is running 12 concerns ....
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....sis of the documents discovered and the statements of MA, a block assessment was made in respect of MA and the company on August 29, 2002, under the provisions of section 158BC of the Income-tax Act, 1961. Subsequently, block assessment proceedings were initiated against the assessee and completed on November 28, 2004, under the provisions of section 158BD of the Act. During the assessment proceedings, the assessee requested the Assessing Officer time and again to permit it to cross examine MA on the basis of whose statement proceedings had been launched and from whose possession the documents were recovered, so that the assessee could prove its case. The request was not acceded to by the Assessing Officer. The Tribunal held that the Assessing Officer was functioning as a quasi-judicial authority and was under an obligation to adhere to the principles of natural justice. Several requests were made by the assessee, but MA was not made available for cross-examination. On that basis, the Tribunal set aside the block assessment. On appeal to the High Court :- Held,_ that the Tribunal was right in its view that in the absence of MA being made available for cross-examination, despite ....
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.... have also been offered for cross-examination. The statement of any other person claiming to be the owner of these concerns applying to the facts of assessee's case cannot be blindly relied upon without confronting the ostensible owner. Since no enquiry/investigation has been carried out into the existence of ostensible owner the reliance of the AO merely on the statement of Rohit Panwala is vitiated. 17. Even on facts, it is not established that assessee does not require colour /chemicals to the extent it has shown to be consumed. No technical or comparative data is brought into record to show that assessee in fact did not require colour and chemicals to the extent it has shown the purchases and, therefore, there is no persuasive span in the argument that these purchases are bogus. 18. We also notice that this assessee has been showing purchases from these concerns in the past and it has been accepted by the department as such. If GP declared by the assessee in current year is better as compared to GP rate in the immediately preceding year when similar circumstances existed and where apparent state of affairs of statement has been accepted then there is no reason to disturb ....
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....hase price of unaccounted material and rate of purchase of accounted for goods. There may be a saving on account of sales tax and other taxes and duties which may be leviable in respect of manufacture or sale of goods in question. The suppliers or the manufacturers make a substantial saving in the income tax in respect of income from sale of unaccounted goods produced and sold by them. This may also be one of the factors due to which the seller may be willing to charge lower rates for unaccounted goods as compared to accounted for goods. Keeping all these factors in mind and also keeping in view the decision of the ITAT in the case of Sanjay Oil Cake Industries (supra) we hold that 25% of the purchase price accounted for in the books of accounts through such fictitious invoices in the name of 33 bogus parties should be disallowed out of the amount of purchases shown to have been made from those 33 bogus suppliers." Since payments in the present case are made by account payee cheques and the three parties are identifiable the ratio of the decision in Vijay Proteins will not be applicable. The only inference from entire set of facts can be found that accounts of the assessee are n....
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....ove. 21. Merely on the strength of statement of Rohit Panwala it cannot be held that purchases are bogus. The decision of Hon. Gujarat High Court in ACIT vs. M. K. Bros. (supra) is relevant to the point as under :- "During the accounting year relating to assessment year 1971-72, the assessee had made purchases of the total value of Rs. 52,254 from certain parties. The Income-tax Officer required the assessee to produce evidence regarding the purchases. In the meantime, the said parties had admitted to the sales tax authorities that they had issued bogus vouchers. The Income-tax Officer held that the purchases were not genuine and assessed the amount of Rs. 52,254 as income of the assessee from undisclosed sources. The Tribunal found that there was no evidence to show that bogus vouchers had been issued to the assessee, that nothing had been shown to indicate that any part of the funds given by the assessee to these parties came back to the assessee in any form, and that the assessee had made its payments by cheque. The Tribunal deleted the addition. On a reference: Held,_ that the conclusion arrived at by the Tribunal was supported by the evidence on record. The amount of ....