AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 1463
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....hrikrishna Trading and M/s. Jaideep Trading Company amounting to Rs. 32,36,601/-, Rs. 8,04,471/- and Rs. 3,11,72,462/- respectively. During the search and survey at the business premises of the assessee purchase bills of M/s. Anuj Enterprises were found. M/s. Anuj Enterprises is a proprietory concern of Shri Manjeet Singh Juneja and in turn he has shown purchase from Shri Dharmesh Purohit, Prop. M/s. Shri Krishna Trading Company. In the search conducted at Krishna Trading Company, wherein Shri Dharmesh Purohit in his affidavit dated 4.3.2008 has deposed that he had got some bills printed in the name of Shri Krishna Trading Company somewhere nine years back but he has never issued any bills in the name of Shri Krishna Trading Company. The assessee has accepted the above transaction as bogus purchase and accordingly he has declared income of Rs. 40,41,072/-. Similarly, in financial year 2005-06 he has also made purchases from M/s. Anuj Enterprises amounting to Rs. 83,83,322/- as bogus declared in the return for the assessment year 2006-07 and Shri Dharmesh Purohit stated that "Shri Rinky Rajpal has used the bills of Shri Krishna Trading Company and all the transactions were routed th....
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....ks of RDR HUF. It is again a broadly undisputed and admitted fact on record that for using such accommodation bogus bills, the appellant in turn obtained bogus bills from Dharmesh Purohit Prop. KTC. Once that was the case, there was absolutely no case for recording the finding that the appellant could not prove the purchases from Shri Dharmesh Purohit, prop. KTC when appellant's admitted case is that no such purchases were affected. Thus, the action of the AO in making addition of four such bogus purchases in the hands of the appellant is totally found to be unjustified and unsustainable both in facts and in law. 4.1.1 The aforesaid finding arrived in the connected case squarely applies to the appellant's case as the supplier Jaideep Trading Co. (JTC), has from the very beginning duly supported by Affidavit of the next chain of the bogus supplier Shri Dharmesh Purohit, Prop. Shri Krishna Trading co. (KTC) has maintained that only accommodation bills were issued to the appellant for which a commission amount was charged. The facts available on record clearly indicate that M/s JTC issued only accommodation bills to f he appellant and hence AO's action in treating the p....
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....4C and initiation of penalty proceedings u/s.271(1)(c). Charging of interest u/s.234B and 243C are mandatory and consequential in nature and the appellant shall accordingly be entitled to consequential relief in view of the appellate directions recorded above. However, no appeal lies against initiation of penalty proceedings and accordingly such ground is rejected. In the result, the appeal is partly allowed." 5. The Department is in appeal against the restricting the addition of bogus purchase of Rs. 3,11,72,462/- to peak credit of Rs. 62,52,248/- and assessee is in appeal on the ground that when the purchases are genuine, the peak addition may be deleted. 6. The ld. Authorized Representative for the assessee has filed the written submission, which reads as under :- "The appellant in fact purchased cotton from M/s. Jaideep Trading Company. He was being assessed to tax under Income-tax Act as well as under VAT Act having PAN as well as TAN allotted to him. The accounts of M/s. Jaideep Trading Company were also audited and report u/s 44AB of the Act was furnished by him along with Income tax return. Bank statement of the appellant were also submitted to prove that the payme....
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....ch. The purchases were effected on credit from M/s. Jaideep Trading Company and payments were made from time to time. Such payments were made within fifteen days hence purchases cannot be doubted upon specially when the goods were sold and quantitative records were maintained. As regards, departmental appeal, it is submitted that the theory of peak credit applied by the learned CIT(Appeals) is well recognized in the proceedings under Income tax Act because the purchases were sold and payments were made from time to time through banking channels only. The purchases effected were also sold during the year itself. Reliance is placed on following judgments. a) Vijay Proteins Ltd vs. ACIT (1996) 56 TTJ (Ahd.) 76/58 ITD 428 (Ahd.) b) CIT-VI vs. Purushottam Jhawar (2013) 40 Taxmann 533 (AP) c) Rajesh Kumar Agrawal vs. Department of Income Tax - ITA No.1514IKOL/2011 order dated 25.06.2013 (Kolkata Bench-C) d) Income tax Officer vs. Maheshkumar Jayantilal Vora (2004) 3 SOT 96 e) ITO Vs. Pawan Kumar (2015) 153 ITD 448 (Del. Bench-F) It is submitted that the appellant had purchased cotton on credit from two parties and sold the same which is proved from the quantitative record....
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....d sales during the year worth Rs. 84.63 crores. The quantitative details of cotton purchased and sold were maintained and books of accounts are audited u/s 44AB of the Act. The audit report was furnished alongwith the return of income. The gross profit earned was 5.12 % on total turnover whereas the net profit disclosed was 3.05%. The search proceeding was conducted in the business premises of the assessee and he has surrendered additional income of Rs. 40,41,072/- represents purchases effected from Shree Krishna Trading Company, Proprietor Shri Dharmesh Purohit, which were treated as bogus. During the year, the assessee has purchased 3896 cotton bales from Jaideep Trading Company, Shri Paramjeet Singh Rajpal, proprietor worth Rs. 3,11,72,462/-. Shri Dharmesh Purohit, Proprietor of Shree Krishna Trading has filed the affidavit that Shri Rinki Rajpal has used the bills in the name of Shree Krishna Trading Company. Therefore, the AO has treated the entire purchase effected from M/s. Jaideep Trading Company as bogus. 9. During the course of hearing of the appeal, the ld. Departmental Representative has produced the case records of the assessee and submitted before us the copy of affi....
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....of explaining the source of purchases of the material by him. The assessee is not responsible to explain the source of source as the payments have been made through account payee cheque being normal business transaction. The assessee does not hold any control over the business done by Shri Paramjeet Singh Rajpal. Shri Paramjeet Singh has originally filed the return, wherein he has shown this transaction and after filing the revised return, he has omitted this transaction, which cannot be fastened the liability of the assessee. 10. From the above reply of the assessee and after considering the reply, it becomes a duty of the AO to make the enquiry from the Bank that the payment given by Shree Paramjeet Singh Rajpal was given back to the assessee. The AO has relied upon the affidavit of Shri Dharmesh Purohit and he has jumped to the conclusion that Shri Rinky Rajpal has used the bills of Shree Krishna Trading Company and amount has gone back to the assessee. Before framing the assessment, the assessee on 23.12.2009 has denied that he has made bogus purchases from Jaideep Trading Company and he has categorically stated before the AO that Shri Rinky Rajpal has used bills of Shree Kris....
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....mpany and he has made payment through account payee cheque and the physical delivery is also taken. The assessee has also deducted the TDS for various services rendered by transporters. We find that in this case the AO has to verify whether the payment made by the assessee had come back to the assessee or not. When the assessee and Jaideep Trading Company have stated before AO that they have routed this through Bank account, then the AO should have made enquiry in the Bank account and if in the Bank account the money would have been returned back to the assessee, then only it could have been treated as bogus, which is not in this case. Therefore, it cannot be treated as bogus purchases. We find that in this case as stated above all the transactions are made through various Banks and all the transactions were reported to Sales Tax Department and Income Tax Department. Therefore, we are of the view that when the assessee has purchased the goods from M/s. Jaideep Trading Company and payments have been made through account payee cheques. Moreover, the same goods have been sold to other party by the assessee in his normal business transaction and assessee has sold the same goods to thir....