TaxTMI 
TaxTMI 
2018 (12) TMI 751
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....towards provident fund. 3. At the time of hearing no arguments were advanced qua disallowance of Rs. 21,566/- made with aid of section 14A r.w.s. 8D by the ld.counsel for the assessee. Considering smallness of the amount involved therein, assessee did not press this ground of appeal, hence it is rejected. 4. As far as disallowance of Rs. 2,19,474/- impugned in third fold of grievance, this issue is squarely covered against the assessee by the decision Hon'ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transport Corporation Ltd., 41 taxmann.com 100 (Guj) wherein the Hon'ble High Court held that if amount of employees' PF contributions are not deposited within time limit provided in the respective Acts, i.e. Provident Fund and ESI Act, then deduction will not be admissible to the assessee. In view of this judgment of Hon'ble jurisdictional High Court, we reject this ground of appeal. 5. Now we take first fold of grievance, which is the main grievance of the assessee. 6. Brief facts of the case are that the assessee at the relevant time was engaged in manufacturing of ferrous and non-ferrous metal. It has filed it return of income on 30.9.2011 declaring t....
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....tements of key persons of such parties were also recorded by Sales Tax Department, Maharashtra. Appellant has made purchases as follows from the aforesaid parties: 1. Parasnath Enterprise : Rs. 1,40,61,135/- 2. Sendoz Steels -: Rs. 1,27,98,864/- 3. Navkar Impex : Rs.37.70,000/- Total Rs.3,06,29,999/- Hence, learned AO asked the appellant to furnish details of purchases made from the above parties and also asked as to why purchases from such parties should not be added to the total income of the appellant being purchases without movement of goods as admitted by the above parties in their statements. In response to the same, appellant furnished its reply vide letter dated 14.03.14 (Copy placed at Pgs.1-2 of P/B) wherein following aspects were brought to the knowledge of the learned AO: > Purchases made from above three parties are genuine and payments have been made to such parties by cheque. Copies of ledgers of such parties along with copies of purchase bills are placed at Pgs.3-33 of P/B. > Confirmation of Sendoz Steels was also placed before AO. Copy of such confirmation is placed at Pgs.34-35 of P/B. ....
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....ted behind the back of an assessee can be used against him so as to make any addition in his hands unless such assessee is provided such evidence and such assessee is given an opportunity to rebut the same. Accordingly, appellant requests your Honors to provide copies of above affidavit/statement/letter to the appellant and also an opportunity to cross-examine concerned persons in the larger interest of justice. I Legal submission in respect of alleged bogus purchase: 5.1 In order to deal with the main issue raised relating to alleged bogus purchase, it is necessary to queer the pitch in regard to the implication of the term "bogus purchases". This expression is used to connote more than one situation. At times the expression bogus purchase' implies merely fictitious entry in the books. The entry made in books of account is not supported by actual receipt of goods. In support of such purchase, a bill or voucher is obtained and produced from the alleged supplier. In short, a mere entry is made in the financial book unsupported by receipt of goods which as stated earlier, is intended to reduce the profit. 5.2 The expression "bogus purchase' is also ....
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....e AO has accepted by the sales of various materials purchased. Under the circumstances it is not open for the AO to disallow a part of the purchases as done in the present assessment. 5.5 Another aspect of the matter is that the learned A. O., with utmost respect, had taken a completely distorted view of the entire transaction and has not paused to examine the effect of his decision. Assuming for the sake of argument that purchases are held to be bogus, then corresponding sales receipts which are said to have been effected out of this purchase would also be required to be deleted as not genuine. Therefore, both purchases and sales will have to be reduced correspondingly and so also the margin of profit disclosed by appellant on the job receipts. In other words, trading account will be required to be recast excluding job receipts made out of purchases. Therefore, it is respectfully submitted that the learned A.O. was clearly wrong in disallowing entire purchase treating it as bogus. Reliance is placed on "Balaji Textile Industries (?) Ltd. Vs. I. T. O. (Bom.) (49ITD177) ". 5.6 Another material aspect which has been lost sight is that the transaction in question is ....
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.... on record details of sales made out of the above goods. It has also placed on record details of payments made through account payee cheques to these concerns. He also pointed out that the profit at 5% of the sales have been shown by the assessee in the return filed. Hence, according to the ld.counsel for the assessee, once corresponding sales have not been disputed, then total purchase cost could not be disallowed, because the assessee got material, out of which, sales have been made. If no material could ever been reached to the assessee, then sales could not be made. Alternatively, he submitted that element of profit involved in these transactions at the most could be added as income of the assessee. He pointed out that in the case of Ganesh Industries V. ITO, ITA No.93/Ahd/2016 and 814/Ahd/2016, ITAT, Ahmedabad has estimated profit. Similarly, Hon'ble Gujarat High Court in the case of CIT Vs. Gujarat Ambuja Exports in Tax Appeal No.840 of 2013 upheld the addition at the rate of 5% of alleged bogus purchases which would meet ends of justice. On the other hand, the ld.DR relied upon the order of the AO. 8. We have considered rival submissions and gone through the record carefu....