TaxTMI 
TaxTMI 
2016 (1) TMI 606
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....4. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a trader in cotton and man-made fabrics on retails as well as semi wholesale basis and mainly deals in suiting and shirting materials. As the facts and circumstances are same in all the years, we are taking Assessment Year 2002-03 as a lead year for deciding the controversy. In the assessment year 2002-03, the assessee has shown purchases of Rs. 3.25 crores. Sales of Rs. 3.93 crores and arrived at G.P. of Rs. 59.45 lacs i.e. 15.11% and N.P.of Rs. 6.83 lacs i.e. 1.73% whereas in last year G.P. was of 13.47%. The case was reopened u/s.147 of the Act and notice u/s.148 dtd.23.3.2009 was issued with the prior approval of the Addl. Commissioner of Income-tax, Rg.13(1), Mumbai vide his approval letter dtd. 23.3.2009 and duly served on assessee. 5. During the course of assessment u/s.143(3) r.w.s.147 of the Act, the AO observed that as per information received from another AO, the assessee alleged to have made purchases from a concern, which is issuing only hawala bills. The AO further observed that survey operation u/s.133A of the Act was carried out by the ITO in the following group concern....
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....sment order as well as the submissions given by the assessee and it is seen that in this case sales are identifiable and quantitative tally is available on record. The alleged bogus purchases, are based on the statement and the assessment record of the third party, the said persons were not made available for cross examination nor the material found form the third party was made available to the assessee. Also, before the A. O. the said three parties have confirmed that they had sold the goods to the assessee. The following facts in this case deserve special mention :- (i) There was a survey at the premises of one Mr. Rakeshkumar Gupta proprietor of Manoj Silk Mllls, Mrs. Herna Gupta, proprietress Shree Ram Sales & Synthetics and Mr. Mohit Gupta the proprietor of Astha Silk Industries. (ii) During the course of survey - all the above mentioned 3 persons stated, in their statements on oath that they were only giving accommodation entries - the payments received from parties by cheques were deposited. in bank and on encashment of cheques, the same was returned to the persons, minus the commission. (iii) Thus, there was no actual sale of cloth/goods to these parties in que....
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....ods and of having made the payments by cheque and subsequently of having sold the same, very items to 3rd parties and booking these sales as income - can the entire purchases be added back as unexplained or duly an ad-hoc addition, if at all, be made to cover the leakages. 3.2(d) In my opinion, keeping in view the totality of facts and circumstances of the case it is clear that although the purchases have been disputed by Mr. Rakeshkumar Gupta proprietor of Manoj Silk Mills, Mrs. Hema Gupta, proprietress Shree Ram Sales & synthetics and Mr. Mohit Gupta the proprietor of Astha Sillk Industries but then the appellant has sold these very items and booked the sales as in come offered the same for taxation the only addition to be made can be for possible leakages - relating to purchases - as they have become the subject matter of dispute - whether appellant In fact purchases them from M/s one Mr. Rakeshkumar Gupta proprietor of Manoj Silk Mills, Mrs. Hema Gupta, proprietress Shree Ram Sales & Synthetics and Mr. Mohit Gupta the' proprietor of Astha Silk Industries or from some other parties - from the open market and then effected the sales. 3.2(e) The total figure of such purc....
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.... aggrieved for the adhoc addition made by the CIT(A) as well as GP addition sustained by the CIT(A), whereas the revenue is aggrieved for deleting the addition made by the AO on account of bogus purchases. 10. We have considered rival contentions, carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by ld. AR and ld. DR during the course of hearing before us. From the record we found that additions were made by the AO in respect of purchases made from three parties, which were found to be engaged in issuing bogus bills without any actual purchase and sale of goods. From the purchase details submitted by the assessee, we found that assessee has shown purchases made from the three group concerns in the A.Y.2002-03, such as M/s. Manoj Mills, M/s. Astha Silk Industries and M/s. Shree Ram Sales & Synthetics amounting to Rs. 29,41,083/-. During the Survey Action conducted by the ITO 14-3 (2), Mumbai, in the premises of these parties, it was found that they are indulging in issuing accommodation (sales) bills and no transaction of any goods, which is con....