TaxTMI 
TaxTMI 
2018 (2) TMI 176
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....de by the AO on account bogus purchases when the assessee has failed to give any quantity wise tally of purchases and its consumption in manufacturing process to establish the genuineness of the purchases made from various hawala parties? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the suppressed profit on account of bogus transaction was to estimated at 12.5% of the net purchases ignoring the fact that the assessee was a contractor who consumes the purchases made by it in the course of its business; that one to one co-relation between item of purchase and sale cannot be established in such case; and therefore, the total income arrived on the basis of estimation of profit attributable to such bogus purchase is not valid in such cases? The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 2. Briefly stated, the facts of the case are that the assessee company which is engaged in the business of a civil contractor had had filed its return of income for A.Y. 2009-10 on 29.09.2009, declaring total income of Rs. 3,73,64,826/-. The return of income filed by the assess....
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.... following parties :- Party Name Amount Shyam Traders 14,35,965/- Sandesh Sales P. Ltd. 8,59,242/- Mani Bhadra Sales P. Ltd. 10,64,079/- Reliance Steel Traders 19,98,493/- Aayush Enterprises 5,48,854/- Real Traders 29,05,418/- Adarsha Trading Company P. Ltd. 19,81,376/- Sunico Traders P. Ltd. 21,54,686/- Dhiren Mercantile P. Ltd. 6,20,038/- Anshu Mercantile P. Ltd. 8,88,909/- Rishabh Enterprises 37,38,430/- New Era Enterprises 37,88,572/- Chair Impex Trading P. Ltd. 58,79,513/- Navyug Enterprises 4,12,261/- Sharda Enterprises 6,33,776/- Heta Sales P. Ltd. 9,05,981/- Akshata Enterprises 9,07,546/- Shanti Enterprises 11,58,195/- Surya Enterprises 13,02,151/- Siddhivinayak Traders 13,51,201/- Ansa Sales Agency P. Ltd. 14,09,930/- Umiya Sales Agency P. Ltd. 15,40,266/- Cimco Corporation 15,59,095/- Centenary Trade Link 18,25,163/- Sushmita International 27,17,961/- Bhavi Sales Agency P. Ltd. Total 5,03,85,966/- , therefore, in order to verify the authenticity of the aforesaid purchase transactions issued summons under Sec. 131(1) to the said parties, which however were returned by the postal authorities with the remarks ....
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....urchases claimed by the assessee to have been made from the aforementioned parties, for certain reasons, viz. (i) the assessee had failed to produce stock register or transport details, lorry receipts, delivery challans etc. which would prove that the goods purchased were actually delivered to the assessee; (ii) that Sh. Sunil Mathreja, the Managing Director of the assessee company in his statement recorded during the course of survey proceedings had admitted of having made bogus purchases; (iii) that the supplier parties from whom the assessee had claimed to have made purchases were blacklisted by the Sales Tax (Vat) Department, State government of Maharashtra as hawala dealers who were merely issuing bills/invoices to various parties without any actual supply of goods/material; (iv) that as per the information received from the Sales Tax Department the assessee was one of the beneficiary of the aforesaid hawala transactions; (v) the assessee had failed to bring on record relevant documentary evidence in the form of goods received note (GRN), goods/survey inspection report, installation report, work completion note, lorry receipts and details of transportation of goods and documen....
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....ount of purchases claimed by the assessee to have been made from the aforementioned parties. The CIT(A) observed that the Tribunal keeping in view the totality of the facts and circumstances of the case vis-a-vis the rate of net profit shown by the assessee, in order to cover up leakage of revenue, if any, had restricted the disallowance to the extent of 2% of the aggregate of the purchases under consideration. The CIT(A) being of the view that as the facts of the case for the year under consideration, viz. A.Y. 2009-10 were pari materia to the facts as were involved in its case for A.Y. 2010-11 which had been decided by the Tribunal, therefore, followed the same and restricted the disallowance of the purchases to the extent of 2% of the alleged bogus purchases. 7. The revenue being aggrieved with the order passed by the CIT(A) had carried the matter in appeal before us. The Learned Departmental Representative (for short 'D.R') relied on the order passed by the A.O and submitted that the CIT(A) had erred in dislodging the same. The Learned Authorized Representative (for short 'A.R') for the assessee submitted that as the issue under consideration was squarely covered by the order ....
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....hese suppliers were not found at the given address. However, at the very same time, we cannot ignore the actual purchases made by the assessee, which was utilized for its construction purpose and sales. Before the AO the assessee has filed detailed statement of consumption of quantity of material so purchased vis-a-vis requirement as per Government formula as per the Thane District Schedule and rates. The assessee had also filed materials, details giving quantities of purchase and sales, summary of monthly purchases, quantitative details of daily purchases for 12 months. The assessee has filed corresponding monthly consumption and sales and quantitative details of sales for 12 months, details of work-in-progress as at the end of the year and also quantitative details of opening and closing stock. The assessee has also submitted before the AO the detailed statement of material required as per formula laid down by the State Government. We had carefully gone through all these statement placed on record and found that during the year assesses had shown total purchases of Rs. 50,95,77,140/-, which was converted into sales amounting to Rs. 57,77,31,972/-. Thus, the assessee has earned ne....