TaxTMI 
TaxTMI 
2018 (5) TMI 131
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....ries. He invoked the provisions of section 133(6) of the Act. All the three suppliers relied on the book entries, bills, bank statements in support of their claim of genuine sales made to the assessee. However, the AO rejected the said explanation and proceeded to make addition of Rs. 14. 99 Crores to the income of the assessee. 3. During the appellate proceedings, the assessee filed copies of the affidavits of the suppliers and relied on various decisions against the said additions on account of bogus purchases. On hearing the same and after obtaining the remand report of the AO on the said affidavits, he partly allowed the appeal of the assessee. In his order, CIT (A) held that the addition of entire purchases is not sustainable and relied on the jurisdictional High Court judgment in the case of Nikunj Eximp Enterprises (372 ITR 619). He further held that restricting the addition to 12. 5% of the said purchases was reasonable. He relied on the Gujarat High Court judgment in the case of Simit P Sheth (356 ITR 451)in this regard. Thus, he confirmed the addition of Rs. 1, 75, 04, 222/- being 12. 5% of Rs. 14, 00, 33, 775/- and deleted the balance of Rs. 12, 25, 29, 553/-. 4. A....
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.... Tribunal in the case of Romila M. Nagpal (supra), wherein in the similar circumstances, addition confirmed by the FAA were deleted. In that order, the tribunal had referred to the case of M/s. Imperial Imp & Exp. (ITA No. 5427/Mum/2015 A. Y. 2009-10). In Imperial Imp & Exp. matter, the assessee was exporting goods. The relevant portion of the order of reads as under: "2. Effective Ground of appeal is about addition made to her income with regard to purchases. The AO received an information from the investigation wing that the sales tax department, Govt. of Maharashtra had made enquiries about bogus purchases/hawala transactions. The sales tax authorities had forwarded the list of beneficiaries who had taken bills from the hawala dealers. The AO observed that assessee had purchased goods worth Rs. 1. 35crores from three parties namely Shri Garnesh Trading (Rs. 27. 73 lakhs); Kishna Chemical Works (Rs. 27. 85 lakhs) and Shreyas Marketing Agency (Rs. 80. 40 lakhs). The AO issued a notice u/s. 148 of the Act . In response to the notice the assessee stated that return filed on 24/9/2009 should be treated as return filed in response to re-assessment notice. After considering th....
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....was justified in making the disallowance of Rs. 16. 99 lakhs. Finally, he dismissed the appeal filed by the assessee. 4. During the course of hearing before us the Authorised Representative (AR) submitted that the assessee had filed all necessary details before the AO, that stock register and quantitative details were made available to the AO, that payments were made through banking channels. He referred to the cases of Shri Mahesh Shah (ITA No. 5194/Mum/2014 A. Y. 2010-11); M/s. Imperial Imp & Exp. (ITA No. 5427/Mum/2015 A. Y. 2009-10); Shri Ramila Pravin Shah (ITA No. 5246/M/2013 A. Y. 10-11); Shri Deepak Popatlal Gala (ITA No. 5920/Mum/2013 A. Y. 2010-11, dated 27/3/2015); Ramesh Kumar and Co. (ITA No. 2959/Mum/2014 A. Y. 2010-11 dated 28/11/2014); Shri Rajeev G. Kalathil (ITA No. 6727/Mum/2012 A. Y. 2009-10 dated 20/08/2014);Shri Ganpatraj A. Sanghavi (ITA No. 2826/ Mum/ 2013 A. Y. 2009-10 dt. 5/11/2 014 and Shri Hiralal Chunilal Jain (ITA No. 4547/Mum/2014 dated 01/01/2016. The DR supported the order of the FAA. 5. We have heard the rival submissions and perused the material before us. We find that in the case of Imperial Imp. & Exp. (supra) identical issue h....
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....r as well as before the CIT(Appeals) was that the purchases in question were duly supported by the bills of purchase. Moreover, the assessee pointed out that all its sales were by way of exports and that there was no evidence to say that the purchases in question were bogus. The assessee also referred to his bank statement to prove payments to such parties. The details of goods sold by the assessee was also furnished, which corresponded to the purchases effected from such four parties. The CIT(Appeals) has primarily affirmed the stand of the Assessing Officer based on the information stated to have been received from the Investigation Wing of the Department relating to the finding of the Maharashtra VAT Department. Additionally, the CIT(Appeals) also noticed that assessee could not prove the existence of the suppliers and, therefore, the circumstantial evidence also suggested that the entire purchases from the four parties was unverifiable. However, he restricted the addition to 5. 41% of the amount of such unexplained purchases, instead of 12. 5% adopted by the Assessing Officer. The CIT(Appeals) has applied the rate of 5. 41% being the gross profit rate of the assessee for the ye....
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....tensibly, the Assessing Officer ought to have brought on record material which is relevant to the transactions of the assessee with the aforesaid four parties instead of making a general observation about the information received from the Sales Tax Department of the Government of Maharashtra. Quite clearly, the Assessing Officer as well as CIT(Appeals) have taken note of the fact that no sales could have been effected by the assessee without purchases. In the present case, assessee has explained that all its sales are by way of exports. The books of account maintained by the assessee show payment for effecting such purchases by account payee cheques and also the vouchers for sale and purchase of goods, etc. Notably, no independent enquiries have been conducted by the Assessing Officer. Under identical circumstances, our Co-ordinate Benches in the cases of Deepak Popatwala Gal (supra), Shri Rajeev G. Kalathil(supra)and Ramesh Kumar and Co. (supra) have held that the Assessing Officer was not justified in making additions merely on the basis of information obtained from the Sales Tax Department of the Government of Maharashtra without conducting any independent enquiries. Before the ....