TaxTMI 
TaxTMI 
2018 (11) TMI 997
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....e Tax Act, 1961 (the Act)concerning AY 2007-08. 2. The assessee has also filed cross objection in the aforesaid Revenue's appeal. 3. The Revenue in its appeal has challenged the action of the CIT(A) in deleting the additions of Rs. 90,24,206/- out of total addition of Rs. 1,12,80,256/- made on account of alleged bogus purchases. The assessee has also simultaneously challenged the action of the CIT(A) for denying the remaining relief as per its cross objections. 4. Briefly stated, the assessee-firm is carrying on business of construction and is pursuing the business as developer. The assessee filed its return of income declaring total income at Rs. 10,09,820/-. The return filed by the assessee was subjected to scrutiny assessment. In the ....
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....abulated below for ready reference: (i) Ghanshyam Electricals Rs.41,083/- (ii) Shri Gopinath Corporation Rs.27,12,300/- (iii) Ambica Marvels & Granite Rs.9,16,230/- (iv) Karnavati Timber Corporation Rs.8,40,868/- (v) Vishwakarma Glass Enterprise Rs.12,32,980/- (vi) Madhu Traders Rs.3,14,235/- (vii) Nakodaji Steel Traders Rs.46,60,560/- (viii) Omega Elevators Rs.5,62,000/- Total Rs.1,12,80,256/- 6. Aggrieved, the assessee preferred appeal before the CIT(A). 7. The CIT(A) observed that the possibility of supply of the goods by the respective parties cannot be outrightly rejected while it is quite possible that bills/invoices might have been arranged by other parties. The CIT(A) observed that g....
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.... in such a situation where purchase cost is not corroborated at all. The learned DR pointed out that the assessee had failed to corroborate purchases by any tangible evidences like invoices, delivery challan, transportation details, consumption details etc. and merely seeks to rely upon a certificate of Government Approved Valuer for the purpose of valuation of WIP (work in progress) declared in the P&L account. The learned DR thus submitted that the ratio of various decisions referred to and relied upon by the CIT(A) is not applicable at all. The learned DR also strongly professed that estimation of GP in the line of Section 44AD of the Act has no basis in the factual matrix. The learned DR accordingly submitted that additions made by the ....
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.... to be bogus purchases and without incurring expenditure as per the purchase bills, the assessee could not have carried out its construction work. The AO has cast aspersions on such valuation report and has observed that it is difficult to understand as to how by merely looking at the construction site by personal visit on 19.12.2009 (date of valuation report) and going through the bills of peripheral expenses, the Valuer could provide certification of the work-in progress as on 31.03.2007. We also note other infirmities found by the AO as a result of threadbare inquiries noted in the preceding paragraphs. Many of the suppliers have altogether rejected the supply having made to the assessee in response to notice under s.133(6) of the Act or....
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....ement in purchase costs and consequent suppression in profits requires to be estimated. While weighing facts and circumstances narrated on behalf of the Revenue, we also observe that the total purchase claimed by the assessee during the year stands at Rs. 307.66 Lakhs. Out of this, purchase worth Rs. 112.80 Lakhs is alleged to be bogus. Corresponding work-in progress (construction-in-progress) shown in the P&L account stands at Rs. 465.62 Lakhs. Thus, if the purchase amount of Rs. 112.80 Lakhs is excluded from the total purchase shown (Rs.307.66 Lakhs), the financial result would be quite fantastic, unreal and abnormal. Thus, despite doubtful circumstances galore in the present case, the benefit of the doubt requires to go to the assessee o....