TaxTMI 
TaxTMI 
2018 (12) TMI 655
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....rding the conditional surrender on assurance that no penalty shall be levied, if assessee co-operates with the department in assessment proceedings and payment of taxes. 1.3 The Ld. A.O. ought to have appreciated the fact that the assessee had surrendered the said amount without reference to records, statement of the seller of goods or their cross examination, only on condition of no penalty. 2. The Ld. CIT(A) erred in confirming the addition of Purchases made by the Ld. A.O., merely on the basis of Statement Recorded by Sales Tax Authorities without providing the Copy of the said Statements to the Appellant and also opportunity to Defend. 3. The Ld. CIT(A) erred in not applying Gross Profit Ratio on the said Purchases, which were utilised for Testing, Quality Control and Production of End Products, as explained in detail as per their request to re-examine this matter. 4. The Ld. CIT(A) as well as Ld. A.O. erred in disallowing the actual Loss on Foreign Currency Term Loan of Rs. 17,47,899/- incurred during the year. 5. The Ld. CIT(A) as well as Ld. A.O. ought to have allowed the deduction of VAT Payment of Rs. 16,14,268/- as VAT amount was not considered as part of P....
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....f Rs. 164.30 Lacs e-filed by the assessee on 11/09/2010. The following quantum additions are the subject matter of present appeal before us:- No. Nature of Addition Amount (Rs.) 1. Alleged Bogus Purchases 4,39,00,166/- 2. Loss on foreign currency term loan 17,47,899/- 3.1 The genesis of the additions stem from the fact that pursuant to receipt of certain information from investigation wing of Income Tax Department / Sales Tax Department, Maharashtra, it transpired that the assessee stood beneficiary of bogus purchase bills aggregating to Rs. 439 Lacs from 14 suspicious dealers, the details of which have been extracted at para-4 of the quantum assessment order. As per the information, these entities were issuing paper bills as per the demand / requirements of the customers without carrying out any actual business. The modus operandi adopted by these suspicious dealers, as extracted on page number-3 of the quantum assessment order, reveal that the aforesaid dealers admitted to be issuing only sales bills without delivering any actual goods to the customers. The affidavits confirming the aforesaid facts were also filed with the Sales Tax Authorities by these suspicious....
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.... basis of statement given by the suspicious dealers / suppliers to the VAT authorities was not justified particularly when the purchases were supported by evidences. It was also submitted that the mere admission in survey proceedings could not be the sole basis of making additions in the hands of the assessee. However, the same could not find favor with first appellate authority who confirmed the stand of Ld. AO. Aggrieved, the assessee is in further appeal before us. 5. The Ld. Auhtorized Representative for Assessee [AR], Shri Nishit Gandhi, on the strength of documents placed in the paper-book vehemently agitated the impugned additions on multiple grounds which have been controverted by Ld. Departmental Representative [DR], Shri D.G.Pansari who submitted that the additions were justified. The Ld. AR also drew attention to the fact that the statement has subsequently been retracted by the assessee during assessment proceeding, the copy of which has been placed on record. 6.1 We have carefully heard the rival submissions and perused relevant material on record including judicial pronouncements as cited before us. Upon due consideration, we find that pursuant to receipt of certain....
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....rawn to the fact that addition of Value Added Tax [VAT] of Rs. 16.14 Lacs as included in the above purchases amounted to double taxation since the said amount was never debited to the trading account. An alternative plea was also raised to estimate some equitable additions keeping in view the totality of facts and circumstances. However, the same could not find favor with Ld. AO who disallowed the gross purchases as surrendered by the assessee during survey proceedings. 6.2 The perusal of quantum assessment order reveal that the whole basis of making addition is the surrender made by assessee in the statement made during survey proceedings without there being any corroborative evidence or supporting material that the purchases were not genuine or the cash was returned back to the assessee by any of the suppliers after receiving the payment from assessee. It is also noted that no independent verification has been carried out by Ld. AO from the impugned suppliers by way of issuance of notice u/s 133(6) or by way of issuing summons u/s 131. The whole basis of addition is embedded in the fact that these suppliers admitted to be indulging in hawala transactions before Sales Tax Authori....
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....duct of the assessee, under the circumstances, was not free from doubt and the onus to prove the purchases conclusively remained un-discharged. 6.6 Therefore, keeping in view the totality of facts and circumstances, we are of the considered opinion that full disallowance of the purchases under dispute as made by lower authorities was not justified. The Ld. AR has canvassed that input VAT was never claimed as deduction and therefore disallowance thereof amounted to double taxation. We do not agree with the same since the input VAT has been adjusted against output VAT and the net amount of VAT has been paid / refunded by the assessee, which in effect amounts to indirect debit to the financial statements keeping in view that fact that purchases were not considered as genuine and therefore, the input VAT claimed there against also could not be considered to be genuine. 6.7 Finally, on the given factual matrix, we estimate the additions @10% of alleged bogus purchases on gross basis i.e. Rs. 4,39,00,166/-. The same comes to Rs. 43,90,016/-. The balance additions stand deleted. 6.8 Ground Number-1 and its sub-grounds agitate the action of first appellate authority in not adjudicating ....