TaxTMI 
TaxTMI 
2018 (11) TMI 997
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.... Officer (AO) under s.143(3) of the Income 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 assesse....
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....tails of alleged bogus purchases in question is tabulated 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....
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.... was no necessity for AO to invoke provisions of Section 145(3) of the Act and reject books of accounts 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 A....
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....rposes of valuation of work-in progress/sales and contends that without the purchase of these items alleged 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 al....
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....ripheral estimations in the form of valuation report etc. some reasonable estimation towards alleged overstatement 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....