AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 1626
X X X X Extracts X X X X
X X X X Extracts X X X X
....s by issuing commissions under section 131 (1)(d) and notices under section 133(6) of the Act and found that purchases of Rs. 5,75,600/- from M/s. Chirag Corporation, Mumbai , Rs. 7,52,300/- from M/s. Balaji Corporation, Mumbai and Rs. 8,32 200/- from M/s. Rishabh Metal (India), Mumbai, totaling to Rs. 21,64,100/- were found to be bogus on the ground that above parties were non-existent on the given address, closed the business and discrepancies like non availability of transportation bills through rail and road, payments through cheques were credited to other persons account, payment made after end of the year and total payments made to supplier was not proved. Therefore, same were disallowed and added to total income. 3. Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). It was noticed in the case of Chirag Corporation, its proprietor Ms. Geeta Jaikant Mehta, vide her letter dtd. 07-05- 2011 stated that she closed her business in December, 2006due to her health problem. Hence, she had not done any business with the assessee as her business was already closed and she also stated that she does not know about the firm and its proprietor. In the case of M/s. Bala....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave been accepted by the Central Excise. The Sales tax department has also accepted the sales and the copies of the sales tax order are attached at page 49 of the paper book. The cheques have been issued to the respective parties and there was no evidence on record to show that the amounts have been received back. Therefore, there is no dispute that the material has been received and found consumed and sales have not been effected. The Ld. AR has relied in the case of ACIT-5(1), Indore vs. Shree Steels in I.T.A. No. 141/Ind/2012 assessment year 2003- 04 to 2006-07 and others dated 26.07.2012 wherein the Hon'ble Tribunal at page 37 Para 4.4.2 is specifically confirmed the addition of Rs. 6% of purchase price. The Hon'ble Tribunal also considered the case of CIT vs. Rajendra Singh Dharam Singh vs. DCIT in I.T.A. No. 497/Ind/2010(assessment year 2007-08) dated 17.05.2016, Indore Bench in Para 11 at page 28 and upheld the addition of 10% of the alleged bogus purchase price. Therefore, it was contended that the addition made by the AO may please be deleted, since the goods received are entered in the books and the quantitative details have been furnished which have been accepted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee requires a specific quality of sheets for manufacturing of the items to be supplied to M/s Kirloskar Brothers we also find that the purchases are made through brokers wherein the said person was given the payment to these parties have been effected through banking channel. It is the essence of transaction so as to decide the genuineness while deciding upon the question of onus of proof since the necessary details regarding purchase are not proved beyond doubt the suppliers were not responded or not transported however, we find that all transactions were made through banking channels and the transaction were reported to the Sales Tax Department. The assessee is maintaining the quantitative details through not day to day stock is maintained the goods have been sold which not have been doubted more particularly in the case of Kirloskar Brothers therefore, these purchases cannot be turned on bogus purchases and totality. We are of the view that the assessee has sold the goods after manufacturing when the assessee has sold these goods then corresponding purchases made, cannot be regarded total non-genuine the Ld. AR has placed reliance in the case of Rajendra Sing Dharam Singh ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ltd. vide order dated 10.01.2011 passed in Tax Appeal No. 1090 of 2009 and in case of Commissioner of Income Tax-I v. Bholanath Poly Fab Pvt. Ltd. vide order dated 23.10.2011 passed in Tax Appeal No. 63 of 2012. The view taken by the Tribunal in case of Vijay Proteins Pvt. Ltd. v. CIT reported in 58 ITD 428 came to be approved. 8. If the entire purchases were wholly bogus and there was finding of fact on record that no purchase were made at all, counsel for the revenue would be justified in arguing that the entire amount of such bogus purchases should be added back to the income of the assessee. Such were the facts in case of ACIT (OSC) Ward 5(3) Nadiad v. Pawanraj B Bokadia (supra). 9. This being the position, the only question that survives is what should be the fair profit rate out of the bogus purchases which should be added back to the income of the assessee. The Commissioner adopted ratio of 30% of such total sales. The Tribunal, however, scaled down to 12.5%. We may notice that in the immediately preceding year to the assessment year under consideration the assessee had declared gross profit @ 3.56% of the total turnover. If the yardstick of 30%, as adopted by the Commis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een the assessee-firm and the actual sellers of the raw materials. Both the Commissioner (Appeals) and the Tribunal have, therefore, come to the conclusion that in such circumstances, the likelihood of the purchase price being inflated cannot be ruled out and there is no material to dislodge such finding. The issue is not whether the purchase price reflected in the books of account matches the purchase price stated to have been paid to other persons. The issue is whether the purchase price paid by the assessee is reflected as receipts by the recipients. The assessee has, by set of evidence available on record, made it possible for the recipients not being traceable for the purpose of inquiry as to whether the payments made by the assessee have been actually received by the apparent sellers. Hence, the estimate made by the two appellate authorities does not warrant interference. Even otherwise, whether the estimate should be at a particular sum or at a different sum, can never be an issue of law. 13 In the aforesaid set of facts and circumstances of the case, the impugned order of the Tribunal is an order which is made in accordance with law and does not require any interference. ....