TaxTMI 
TaxTMI 
2016 (12) TMI 879
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....u/s 143(3) of the Income-tax Act,1961 (Hereinafter called "the Act"). 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the Tribunal") read as under:- "l.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in estimating the undisclosed profit of Rs. 14,l8,097/- @ 12.50% on alleged bogus purchase of Rs. 1,13,44,778/-; 2.0 The Ld. CIT(A) before estimating the undisclosed profit @ 12.50% on disputed purchase ought to have appreciated the understated vital facts, being; a) The alleged in`-genuine purchase are supported with purchase bills, delivery challans, confirmation of accounts, PAN, bank statements, stock statements and other documents; b) The purchase is treated as ingenuine merely relying on the information received from the Sales tax department and without allowing a copy for confrontation and without allowing an opportunity of cross examination; c) The appellant had disclosed the G.P @ 45.49% on sales (85% on purchase) which is in par with own past history and Industry's average profit margin; d) The Ld. A....
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.... Rs. 8,84,584 2 Deep Enterprises 27750595164V -do- Rs. 18,09,710 3 Kwality Enterprises 27790284742V -do- Rs. 60,33,496 4 V3 Enterprises 27860613194V -do- Rs. 26,16,988 Total Rs.1,13,44,778/- The sales tax department conducted independent enquiries in each of the above parties and concluded that these parties were engaged in the business of providing accommodation entries only. The notices were issued by the AO u/s 133(6) of the Act to these four parties which returned back unserved. The assessee was asked by the AO to produce all these parties. The assessee failed to produce these parties before the AO to prove genuineness of the claim. The assessee submitted that the purchases were made through brokers who are now not co-operating with the assessee. The assessee requested that GP ratio be estimated at 46% on these purchases. The assessee also could not offer explanation regarding the source of the said expenditure as well that purchases are genuine. The AO observed that these parties denied to supply....
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....ent displaying the purchase made from such 4 parties and corresponding sales made against such purchases and profit earned thereon. The Ld. A.O, ignoring the above stated documents, erred seriously in holding that the appellant's purchase as ingenuine and assumed that the appellant would have incurred unexplained purchase expenditure to source the sales; 1.2 The Ld. A.O is not justified in making a harsh presumption that the appellant would have procured the goods from some unidentified sources and incurred unexplained expenditure (purchases) against the sales accepted as genuine. In this context, the appellant submits that its purchases had been made only through brokers who supplied the goods at premise (on site) of the appellant and furnished the bills of such 4 parties to the appellant for making the payment at agreed terms. The appellant, as desired by brokers, made only the cheque payments against these purchase bills and appellant had not made any unaccounted cash payment for purchase of goods. The appellant alternatively submits that even it is presumed that the appellant had not made purchases from such 4 parties, then it is possible that such brokers would ha....
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....above purchases = Rs. 1,93,83,886/- Closing stock from above purchase = Rs. 52,882/- Gross profit =Rs.80,91,990/-(41.75%) Without prejudice, the appellant makes a prayer to adopt the concept of real income and estimate the total income @ 45.49 % on sales which would take care of the ingenuine purchase. It is to further submit that even in case of best judgment assessment is passed , after rejecting the books of accounts, then, in such case, the total income is estimated, on the basis of honest guess work as per the normal profit in the industry. [Kachwala Gems - 288 ITR 10(SC). The appellant makes a prayer to adopt the concept of real income and estimate the suppressed income of Rs. 7,24,957/- (@ 45.'49% - 41.75% on Rs. 1,93,83,886/-) that reasonably would have been earned in such trading activity; 1.6 The appellant to substantiate, the genuineness of the disclosed purchase and corresponding sales, relied upon the understated documents as under:-' " a) Details of the four purchases parties along with their address and PAN; b) A tabular chart (quantitywise and valuewise) displaying Purchase vis-a-vis Sales displaying the ....
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....TTJ 1126 (Ahd-ITAT) ii) Nisraj Real Estate & Export(P) Ltd vs. ACIT 31 DTR 456 (JP-ITAT) (Trib) ii) ACIT vs. Kishan Lal Jewels (P) Ltd 147 TTJ 308(Del-ITAT) iii) Shubh Laxmi Exports vs. ITO 10 DTR 281 (Jp-ITA T) (Trib) Onus is the on the Revenue to prove the payment to invoke Sec.69C i) Himalaya Distributors vs. ITO 29 DTR 267 (Pune-ITAT) ii) M.P. Malliwal vs. JCIT 10 SOT 319 (Hyd-ITA T) (TM) iii) Rajmal Leknicnenc: vs. ACIT 791TD 84 (Pune-ITA T) Only profit embedded in the ingenuine purchase could be brought to tax. i) CIT vs. Simit P. Sheth 38 Taxmann.com 385 (Guj-HC) ii) CIT vs. Bholanath Poly Fab Pvt Ltd 355 ITR 290 (Guj-HC) iii) CIT vs. President Industries 258 ITR 654 (Guj-HC) iv) CIT vs. Balchand Ajit Kumer 263 ITR 610 (MP-HC) v) Man Mohan Sadani vs. CIT 304 ITR 152 (MP-HC) vi) CIT vs. Leaders valves (P) Ltd 285 ITR 435 (P&H-HC) Merely non appearance of suppliers would not conclude the purchase as ingenuine i) CIT vs. Nikunj Eximp Enterprises (P) Ltd 35 Taxmann.com 384 (Bom-HC) In view of the above, a humble prayer is made :....
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....see submitted that the following parties were included in the list of bogus parties by Sales Tax Department of Government of Maharashtra with whom the assessee had made purchases:- S No. Name of parties TIN Financial year Amount 1 Rohit Enterprises 27020680974V 2009-10 Rs. 8,84,584 2 Deep Enterprises 27750595164V -do- Rs. 18,09,710 3 Kwality Enterprises 27790284742V -do- Rs. 60,33,496 4 V3 Enterprises 27860613194V -do- Rs. 26,16,988 Total Rs.1,13,44,778/- The A.O. observed that the above parties are suspicious parties who were providing accommodation entries without doing any business as per the information received from Sales Tax Department, Government of Maharashtra and the assessee had made purchases from these parties without actual supply of goods. The A.O. also issued notice u/s 133(6) of the Act asking to furnish certain documents of the above parties but the notices were returned back unserved. The assessee was also asked to produce t....
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.... against purchases of Rs. 1,13,44,778/- . The credit for purchases from these four parties of Rs. 1,13,44,778/- are appearing in the books of accounts of the assessee. The assessee has to discharge the primary onus as to the genuineness and bonafide of the transaction of purchase of goods. It is observed that the A.O. has made addition of the entire purchases amount to Rs. 1.13 crores by making additions of Rs. 1,31,88,227/- being peak credit payable during the year for purchases to these parties which included balance of Rs. 18,43,451/- for purchases made in the earlier year, while the AO has , however , not doubted the sales made by the assessee against these purchases. The assessee has reconciled the quantitative details of the stock reflected in these purchases with quantitative details of stock as per sale invoices. The A.O. has doubted the purchases from these four alleged accommodation entry providers being hawala dealers as concluded by Sales Tax Department of Government of Maharashtra to be bogus purchases, that these four parties only provided accommodation bills and the goods were never supplied by these parties and the assessee allegedly made purchases from some other p....