TaxTMI 
TaxTMI 
2015 (4) TMI 95
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....ed return of income. For return of income filed on 30-06-2008 for AY 2006-07 Assessee declared total income at Rs. nil after claiming unabsorbed depreciation of earlier years. Thereafter the assessment was framed u/s 143(3) r.w.s 153A of the Act vide order dated 29.12.2008 and the total income was determined at Rs. 2,99,03,076/- before setoff of brought forward depreciation losses. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) who vide order dated 21.12.2010 granted partial relief to the assessee. Aggrieved by the order of CIT(A), Assessee and Revenue are now in appeal before us. Before us, the ground raised by the Assessee reads as under:- 1. That on facts and circumstances of the case, the Id. CIT(A) has grossly erred in restricting the disallowance of trading purchases to 25% instead of deleting the entire disallowance erroneously made by the AO, even though - - The appellant company has made sales of the corresponding goods at a profit which is duly offered for taxation - The appellant company has maintained complete quantitative detail of the purchase as also the sales - Purchases stands confirmed by the supplier party in response to the notice u/....
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.... corroborating the statement of Shri E.G. Peethambaran, in conformity statement, Shri Madanlal Bagrecha of Mumbai has stated that his business is to issue bogus sales bills of various concerns floated by him to interested parties on commission basis. Various concerns floated by him comprised of the nine concerns listed by the AO at page 6 of the order. It was also stated by him that the assessee was one of the parties to whom he had issued bogus sale bill through his various concerns. It was further stated by him that the Assessee used to issue "account payee" cheques against the bogus sales bill issued to it and in turn Mr Bagrecha, after deducting mutually agreed commission of 0.60%, used to return cash to the Assessee. Mr. Bagrecha had also admitted to have never done any real business with the assessee nor supplied any goods to the Assessee. On the basis of impounded material, the year wise details of bogus purchase for A.Y. 06-07 & 07-08 was listed at page 7 of the order and the aggregate amount of bogus purchase for the year under consideration was worked out Rs. 2,62,21,805/-. Assessee was asked to furnish account number, cheque number and name of the bank through which the ....
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....by Shri Madanlal. H. Bagrecha who -admitted that he has issued bogus bills to the appellant company only for commission and he used to return the cash to the company. On this basis, even the appellant has admitted the bogus purchases for A.Y.2007-08. Further, the appellant also failed to establish with evidence that delivery of goods have taken place. Therefore, it is held that the Assessing Officer was justified in treating the purchases as bogus purchases However, in my view, the Assessing Officer was not justified in making the addition of Rs. 2,62,21,805/- by disallowing entire purchase amount and treating it as income from undisclosed sources. It is a fact that the appellant has made sales of the corresponding goods and brought the money in the books which is offered for taxation. Further, the appellant has maintained quantitative details of purchases and sales. Hence, making addition by disallowing entire amount cf purchases is not justified. In such a situation, the Hon'ble ITAT., Ahmedabad Bench has decided in the case of Vijay Proteins Ltd. vs ACIT 58 ITD 428 that in such a situation, it will be reasonable to restrict the addition at 25% of the bogus purchases. Followi....
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..... The Ld DR on the other hand pointed to the findings of AO and submitted that when the employee of the Assessee has clearly admitted that the purchases are bogus, has not retracted the statement and in view of the statement of the seller of the goods that the sales made by him to the Assessee was bogus, AO was fully justified in making the addition. He further submitted that the onus is on Assessee to prove the factum of business expenditure; the Assessee has grossly failed to discharge the same. On the contrary, it is evident from the inquiries made during the assessment proceedings that the Assessee adopted the fraudulent means to evade tax liability. He further submitted that the ld. CIT(A) has erred in granting the relief on the basis of the decision of Gujarat High Court in the case of Vijay Protiens (supra) because the facts in those case are distinguishable and cannot be applied to the present facts. He thus supported the order of AO. 10. We have heard the rival submissions and perused the material on record. It is an undisputed fact that during the course of survey at the premises of Assessee, the statement of the Branch Manager (Shri Peethambaran) were recorded wherein h....
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....antities of such sales for each class separately". 3. (2) The opening and closing stock of goods produced, giving breakup in respect of each class of goods and indicating the quantities thereof (b) In case of trading companies, the purchases made and the opening and closings stocks, giving breakup in respect of each class of goods traded in by the company and indicating the quantities thereof. 11. (c)........ 12. (d) In case of a company which falls under more than one of the categories mentioned in (a) (b) (c) above, it shall be sufficient compliance with the requirements herein if the total amounts are shown in respect of the opening and closing stocks, purchases, sales and consumption of raw material with value and quantitative breakup and the gross income from services rendered is shown. Note 1: The quantitative of raw materials purchase, stocks and the turnover shall be expressed in the quantitative denominations in which these are normally purchased or sold in the market 13. Seen in the light of the mandatory disclosure requirements of the Companies Act 1956, it is seen that the impugned purchases and sales have not been disclosed by the Assessee in its audited account ....