TaxTMI 
TaxTMI 
TaxTMI 
1993 (3) TMI 359
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....ale bills to different parties in respect of sales which had not, in fact, been carried out. The petitioner was one of the parties to whom such bogus bills had been provided by Parshuram Metal Industries. Action under section 133A was therefore taken in the petitioner's case in February 1985 and it was found that the petitioner had debited in its books purchases from Parshuram Metal Industries as under:- Assessment year Amount (Rs.) 1982-83 27,030 1983-84 51,950 1984-85 1,85,510 The department, therefore, reopened the assessment proceedings for assessment year 1982-83 by issue of notice under section 148 and took further action under section 143(2)(b) for assessment years 1983-84 and 1984-85. 4. While these proceedings were pending, the petitioner submitted returns under the Amnesty Scheme for these three years in March 1986. In these returns, it offered for taxation 'peak' of the amounts of purchase debited in the books as per purchases made from Parshuram Metal Industries. The amnesty returns were, however, not accepted under the Amnesty Scheme and reassessments were completed adding the entire amounts of purchases from Parshuram Metal Industries, as stated ....
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....rchase prices of the bills. It is explained that after making such cheque payments to PMI the petitioner used to get the same amount of the cash back from PMI because in reality there was no purchase from PMI. It is urged that such cash was used again for making cash purchases from other dealers as explained above. It is the contention that in these circumstances the matter should be treated on the same lines as unproved loans and only the peak of such bogus bills should be disallowed. 6.2 The petitioner has urged that whereas the purchases debited as purchases from PMI are bogus, there are other purchases in cash which are not debited and, therefore, even if the debits in respect of purchases from PMI are not treated as genuine, the fact remains that there are some purchases which are cash purchases and are not debited in the books and, therefore, a deduction has to be allowed for those purchases. It is argued that in these circumstances, in fact, only some nominal disallowance can be made out of the Purchase Account on the assumption that there may be some inflation in the purchase price inasmuch as the bill supplied by PMI cannot be accepted as proof of the correct price of tha....
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....g stock and purchases with the sales and closing stock for the relevant assessment years." 7.3 In these circumstances, when there is no quantity tally, the debits in respect of the purchases from PMI have to be taken as mere bogus debits which only inflate the total of the purchases account. There is no material to come to the conclusion that as against such bogus bills debited there must have been some other cash purchases which would call for a different consideration of facts. In fact, we find that initially it was not the petitioner's case that all purchases were genuine though the bills supplied were bogus bills. As discussed above, in that situation, only the inflation in purchase price would come in for disallowance, as pointed out in the Tribunal decision mentioned above. On the other hand, when filing the amnesty returns, the petitioner offered to be taxed on the peak amounts of purchases from PMI which we find are only slightly less than the total purchases shown as purchases from PMI as under :- Assessment Year Total purchases from PMI as disallowed by the Assessing Officer Peak amount disallowable as per the petitioner Rs. Rs. 1982-83 27,030 27,030 19....
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.... these circumstances the best course to follow would be to reject the book result and to estimate the business income under section 145(2) of the Act. 10. The relevant facts can be summed up in brief as under:- Asst. Year Turnover Total purchases from PMI debited in books Total disallowance u/s 40A(3) by ITO Part of PMI purchases offered for disallowance under Amnesty Scheme offered by petitioner in settlement Total of cols. 5 & 6 1 2 3 4 5 6 7 Rs. Rs. Rs. Rs. Rs. Rs. 1982-83 33,78,000 27,030 1,09,527 27,030 55,000 82,030 1983-84 48,70,000 51,950 2,28,310 27,638 1,05,000 1,32,638 1984-85 58,11,000 1,85,510 2,38,880 1,58,481 1,20,000 2,78,481 11. On an overall consideration of the facts as discussed above, we feel that it would be fair and reasonable to compute the total income for the three years by making lump sum additions of ₹ 1 lakh, ₹ 1,50,000 and ₹ 3 lakhs respectively for the three assessment years 1982-83, 1983-84 and 1984-85. Assessment orders passed by the ITO under section 143(3) for the three assessment years are set aside and total income are computed as per Annexures 1, 2 and 3. The ITO is directed to issue ....