TaxTMI 
TaxTMI 
2017 (8) TMI 1319
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....eration and results of the same would also be applicable to the connected appeals. 2. Grounds of appeal in ITA No.563(Asr)/2016 for A.Y.2008-09 filed by the Revenue Department are reproduced as under: "1. Whether on the facts and in the circumstances of the case & in law, CIT(A) is justified in restricting the addition of Rs. 82,01,493/- made by the AO on account of bogus/fictitious purchases made by the assessee to Rs. 4,10,074/-, being profit at rate of 5% of the bogus/fictitious purchases made. 2. Whether on the facts and in the circumstances of the case & law CIT(A) is justified in restricting the addition of Rs. 82,01,493/- made by the AO on account of bogus/fictitious purchases made by the assessee to Rs. 4,10,074/-, ignoring the decision of ITAT Bench, Mumbai in the case of M/s Lifeline Drugs and Intermediates as per which the onus is on the assessee to prove that the purchases debited to trading account are genuine and correct in nature, and if the assessee fails to discharge the onus, the AO is correct in making the addition of entire bogus/fictitious purchases." And Grounds of appeal of ITA No.571(Asr)/2016 for A.Y.2008-09 filed by the assessee are....
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....m 720.69 3601143 ii Rose Implex AAMFR1123K 24220400622 Firm 920.07 4600350 Total 1640.76 8201493 To verify the above said purchases, information was called u/s 133(6) of the Act from the aforesaid parties and thereafter, to verify the actual existence of the parties. In response, the reply was received by the Ld. Assessing Officer and thereafter to verify the actual existence of the parties commission was sent u/s 131(1)(d) of the Act to the ITO, Ward-2(3)(7), Surat in pursuance to which, a field enquiry was conducted by Inspector Sh. Jadgish Parmar on dated 03.02.2016 and he had reported that the premises is found to be open once in a two and three months only for cleaning purposes and no business or other activities have been carried our from the said premises and thereafter, show cause notice was also issued to the assessee on 14.03.2016 requiring him to prove that purchases made by him from the above parties are not bogus and further to verify the same and to prove the identity of the broker and genuineness of the transaction. In response, the assessee had submitted his reply dated 16.03.2016 by mentioni....
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....s escaped assessment. Thus, the action of AO in reopening the case was justified and the grounds of appeal are dismissed. Ground No. 3 The second legal issue raised by the appellant is that speaking order has not been passed to dispose off the objections. However on going through the order of the AO It is clear that the speaking order was passed on 04.01.2016. Thus this ground of assessee is dismissed as well. Ground No.8, 9 & 10 The AO has made addition of bogus purchases of Rs. 82,01,493/- without rejecting the books of accounts of assessee. Similar addition was made by the AO in A.Y 2012-13 in the case of assessee which was decided by CIT(A)-1, Amritsar as under : "The AO has made an addition on account of bogus purchases to the tune of Rs. 1,59,67,475/- without rejecting the books of accounts of the assessee. Further the sales of the assessee have not been doubted. The sales of the appellant have been accepted as it is. Purchases cannot be held to be bogus without doubting the sales as held by Bombay High Court in the case of C1T vs Nikunj Exim Enterprises Pvt. Ltd. Assessee has also provided complete quantitative details. The Gujara....
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....ities have been carried out from the said premises which clearly proves that no such parties from whom the assessee has made the purchases, exists at the given addressee and in fact, these concerns are actually not engaged in the business of diamond. These are bogus/fictitious concerns and an agent in sending replies u/s 133(6) of the Act on behalf of all the bogus /fictitious concern. Further the Ld. AO tried to confirm the genuineness of the parties from whom the alleged bogus purchases were made. In response the assessee has provided death certificate of Sh. Paresh Bhai and purchase bills from the above mentioned parties. But merely production of the death certificate of the broker (Sh. Paresh Bhai) does not prove the identity of the person whom he is referring to. Although the assessee has produced purchase bills but this does not prove the genuineness of the transactions as assessee himself never visited these parties personally and moreover, as per information available with the Department, the assessee got bogus purchase bills through accommodation entries. In real fact the assessee has failed to discharge his onus to prove the genuineness of the parties although produced hi....
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....as reduced its profit by showing artificial or bogus purchases, the same is liable to be added to its total income, if the assessee is unable to show genuineness of those purchases. Finally the Ld. CIT(A) was not right to grant relief to the assessee in view of the above factual matrix and hence, the order passed by the CIT(A) is liable to the set aside to the extent as challenged by the Revenue Department. 7. On the contrary, the Ld. AR submitted that all the transactions have been made through RTGS/Cheques and the same have been confirmed by the Assessing Officer and it was rightly submitted before the Assessing Officer that the broker namely Sh. Paresh Bhai through whom the assessee had made the purchases, had died and once the assessee duly produced the death certificate, therefore it was upon the Revenue Authorities to find out where abouts , business activity and/or occupation of the said person by holding enquiry which certainly the Revenue Authorities failed to do so. The Ld. AR urther submitted that the assessee was maintaining the complete books of accounts and verified the said purchases under challenge through vouchers and there was complete tally of each and ever....
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....sal of SLP and not a speaking order. 8. We heard the parties and have gone through with the facts and circumstances of the case and rival submission of the parties and judgments relied upon. Let us to first discuss the ratio laid down that the entire undisclosed income generated out of bogus transactions, deserves to be added to total income, as held by Ahmedabad High Court and further affirmed by the Apex Court in N. K. Industries Ltd. Vs. DCIT, 2016-TIOL-3165-HC-AHM-IT , as relied upon by Ld. D.R. It was stressed upon by the Ld D.R. that now it is not resintegra that the entire undisclosed income generated out of bogus transactions , deserves to be added in total income in view of decision of Apex Court in the aforesaid case and the judgment passed by Apex Court has binding effect. We feel it appropriate to consider the issue raised by the Ld. D.R. that whether dismissal of SLP, has binding effect or not. In our considered view as relied upon by Mr Salil Kapoor, Ld Advoctate, the judgment passed in the case of Kunhayammed and Ors. Vs. State of Kerala & Ors. (245 ITR 360) squarely dealt with the aforesaid situation and laid down the ratio qua dismissal of SLP. Relev....
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....etition. In Workmen of Cochin Port Trust Vs. Board of Trustees of the Cochin Port Trust and Another 1978 (3) SCC 119, a Three-Judges Bench of this Court has held that dismissal of special leave petition by the Supreme Court by a non-speaking order of dismissal where no reasons were given does not constitute res judicata. All that can be said to have been decided by the Court is that it was not a fit case where special leave should be granted. That may be due to various reasons. During the course of the judgement, their Lordships have observed that dismissal of a special leave petition under Article 136 against the order of a Tribunal did not necessarily bar the entertainment of a writ petition under Article 226 against the order of the Tribunal. The decision of Madras High Court in The Management of W. India Match Co. Ltd. Vs. Industrial Tribunal, AIR 1958 Mad 398, 403 was cited before their Lordships. The High Court had taken the view that the right to apply for leave to appeal to Supreme Court under Article 136, if it could be called a right at all, cannot be equated to a right to appeal and that a High Court could not refuse to entertain an application under Article 226 of the C....
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....eclaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties. (vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation. (vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court the jurisdiction of High Court to entertain a revew petition is lost thereafter as p....
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....d. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Govt. Department. i.e., Defence, Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were infact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the respondent-assessee. The Assessing Officer as well as CIT(A) have disallowed the deduction of Rs. 1.33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of Rs. 1.33 Crores was not bogus. No fault can be found with the order dated 30-04-2010 of the Tribunal." Further in the case of CIT vs. Bholanath Poly Fab.(Pvt.) Ltd. (2013) 40 taxman 494 (Guj), the Hon'ble High Court of Gujrat while de....
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....he assessee is not doubted and the addition has been made without rejecting the books of accounts and even otherwise the assessee has earned the profit and already paid the relevant taxes and even otherwise on the consideration of aforesaid judgments it is clear that entire amount covered under such purchases cannot be subjected to the tax but the profit element or embedded therein would only subject to tax which has already been done in the instant case. The judgments relied upon by the ld. DR does not support the case of the Revenue, because of the aforesaid judgments and consideration of facts and circumstances discussed above. The apprehension /suspicion of the ld. Assessing Officer as well as Ld. DR is not correct that after making purchase, the assessee transferred the amount through RTGS thereafter, the said amount was transferred to outside/ three parties and thereafter, in lieu of the bogus purchases, the cash has been received by the assessee. It is not in controversy that the Department has not produced any evidence by which it can be said that the assessee got the benefit of cash while enrouting the purchase price of the alleged bogus purchase. Even otherwise i....
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....htly concluded by referring the judgment passed by the ITAT , Mumbai Bench and observing the similar and factual circumstances restricted the addition @ 5% of the bogus purchases, therefore, the same does not deserve to be interfered with at least. 11. We have gone through with the facts and circumstances of the case as in the instant case, the Ld. CIT(A) although given substantial relief to the assessee, however, sustained the addition by restricting it to @ 5% of the bogus purchase by referring the Judgment delivered by the Mumbai, ITAT Bench without analyzing the entire facts and circumstances of the case and even otherwise the said addition is unreasoned because if we consider the said case with the instant case then will many dissimilarities because in the referred case , the assessee claim was that he made the payment through the cheque however, the respective party denied to have received any cheque and also submitted that he had already filed complaint qua bills on 6 March, 2007 against the assessee and alleged to have been forged his name and further the A.O. issued notices to the other two parties from whom the assessee had shown purchases which were also returned by p....