2013 (10) TMI 1028

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....was right in law in restricting the disallowance to the extent of 12.5 percent of the bogus purchase, without appreciating the factual aspect and by ignoring the manifest evidence relied upon by the Assessing Officer and overlooking the ratio laid down by the hon'ble High Court in the case of Pawanraj B. Bokadia in Tax Appeal No. 2345 of 2009, dated September 29, 2011?" 2. Briefly stated facts are : 2.1 That the respondent-assessee is engaged in the business of trading in steel on wholesale basis. For the assessment year 2006-07, the assessee filed a return of income declaring total income of Rs. 1,95,500. The assessment was reopened by issuing notice under section 148 of the Income-tax Act on March 28, 2008. 2.2 During the course ....

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....t of the assessee. The Commissioner (Appeals) reduced the additions from Rs. 41,04,903 to Rs.12,31,471 and deleted the balance of Rs. 28,73,432. While doing so, he deleted the addition of Rs. 5 lakhs as made by the Assessing Officer on the ground that since the addition on account of bogus purchases had already been made the same cannot be formed the basis for books of account and estimating the income. 2.5 Such order of the Commissioner (Appeals) gave rise to two appeals one by the assessee and another by the Revenue. Such appeals came to be disposed by the Tribunal by a common judgment dated February 24, 2012. The Tribunal was of the opinion that twelve and half percent of the disputed purchases should be retained in the hands of the a....

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....el, equivalent of purchase also must be believed. It was in this background that the Commissioner (Appeals) made the following observations :            "4.3 I have considered the submissions of the authorized representative and the order of the Assessing Officer. It has been admitted that there was a regular arrangement for providing accommodation sales bills. The appellant has not been able to provide a confirmation from the supplier that the goods where indeed supplied to the appellant. It is an established fact that the onus lies on the appellant to prove that the purchases are genuine. The appellant has made the payments in cheque and the sales made by the appellant have been accepte....

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....ader in steel the assessee sold certain quantity of steel, he would have purchased the same quantity from some source. When the total sale is accepted by the Assessing Officer, he could not have questioned the very basis of the purchases. In essence, therefore, the Commissioner (Appeals) believed the assessee's theory that the purchases were not bogus but were made from the parties other than those mentioned in the books of account. 7. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. So much is clear by the decision of this court. In particular, the court has also taken a similar view in the case of CIT v. Vijay M. Mistry Construction....