TaxTMI 
TaxTMI 
2019 (4) TMI 1106
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....AY 2009-10 & 2010-11 respectively. Since these cross appeals for both the AY‟s raises similar issues and common grounds, all these appeals were heard together and disposed of by this common order. 2. First we shall take-up cross appeal in ITA no. 4196 & 4404/Mum/2017 for AY 2009-10 filed by Revenue and the assessee respectively. The solitary issue revolves around bogus purchases allegedly made by the assessee from the hawala dealers who were allegedly engaged in providing accommodation entries by issuing bogus bills without supplying any material. The assessee is engaged in the business of printing, designing and layout , offset printing, digital printing, inject printing, drum scanning, flex/vinyl banners, four colour positives etc. . The assessee had turnover of Rs. 5.08 crores while purchases constituted major head of expenditure being Rs. 3.79 crores. The case of the assessee was reopened by Revenue by invoking provisions of Section 147 of the 1961 Act and notices dated 14.03.2013 u/s 148 of the 1961 Act was issued by the AO to the assessee. The assessment in the case of the assessee was earlier completed u/s 143(3) vide assessment order dated 30.11.2011. The reasons for....
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....essee filed copy of bank statement to show that payments were made to this party. The assessee could not produce the correct address of this party before the AO. It was observed by the AO that this party has deposed before Sales Tax Authorities through affidavit filed by its proprietor Mr Hemant C. Shah that he has only issued bogus bills without supplying any material. It was also averred by the proprietor that his concern Yash Impex was used by Mr Dharmesh R. Hakani who used his TIN and he received Rs. 16,000/- from said Mr Dharmesh R. Hakani. The AO added the said alleged bogus purchases to the tune of Rs. 41,34,364/- from Yash Impex as income of the assessee being unexplained expenditure u/s 69C of the 1961 Act. 3. Purchases from Jain Corporation The assessee had shown purchases to the tune of Rs. 37,85,392/- from this party. Notice issued by the AO u/s 133(6) to this party returned un-served. The assessee submitted that this party is supplying flex and other raw material wherein margin is very thin due to fierce competition. The assessee also submitted that this party has closed business or relocated its business to some other place. The assessee filed copy of bank stateme....
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....e purchases were made and the parties to whom payments were made are different. The AO also observed that it would be incorrect to hold that all the purchases made form broker are bogus. However, for these three parties namely (i) Jain Corporation (ii) Yash Impex and (iii) Shah Enterprises wherein these parties have filed affidavit/statements before Maharashtra Sales Tax Department to be involved in bogus accommodation entries being hawala dealers issuing bogus bills without supplying any material, the AO observed that the modus operandi was to deposit cheque received from the beneficiaries and return them after retaining commission and these expenses were treated as unexplained expenditure u/s 69C of the 1961 Act and added to the income of the assessee , vide assessment order dated 27.03.2014 passed by the AO u/s 143(3) read with Section 147 of the 1961 Act. 3. The assessee carried the matter in appeal before learned CIT(A), who was pleased to confirm additions to the tune of 12.5% of the alleged bogus purchases vide appellate order dated 30.03.2017, by observing as under: " 6.1 During the course of appellate proceedings, the appellant submitted details of invoices, ledger acco....
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....he assessee is in printing business both offset and digital. It was submitted that assessment for AY 2009-10 was framed u/s 143(3) and later the assessment was reopened by invoking provisions of Section 147 of the 1961 Act. The AO has added 100% of the alleged bogus purchases while learned CIT(A) has restricted the same to 12.5% . it was submitted that GP earned by the assessee was 25.14% for AY 2009-10 and 21.1% for AY 2010-11. It was submitted that survey was conducted by Revenue on 19.12.2012 u/s 133A of the 1961 Act and statement of Director was recorded on 19.12.2012. The assessee relied upon decision of Division Bench of ITAT, Mumbai is in the case of Nikhil Kishore Gandhi v. ACIT in ITA no. 315/Mum/2016 , order dated 04.08.2017 and decision of SMC of ITAT, Mumbai in the case of Mr. Muuffazal Hakim Penwala v. CIT(A) in ITA no. 3739/Mum/2017 vide orders dated 20.09.2017. Based on these decisions, it was prayed that additions to the tune of 2% be estimated. The learned DR on the other hand submitted that the assessee has allegedly obtained bogus accommodation entries towards purchases from these three parties. It was submitted by learned DR that the assessee did not substantiat....
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....terprises, Goregaon(E) The assessee had shown purchases to the tune of Rs. 28,60,676/- from this party. Notices u/s 133(6) were served on this party and this party denied to have any transaction with the assessee during financial year 2008-09(AY 2009-10). The said party alleged in its reply to the AO that its TIN was misused for issuing bogus bills. The assessee, however, before the AO submitted copy of ledger account of this party, bank statement in support of its purchases. The AO observed that this party through its proprietor Shri Bhushan G. Shah has filed an affidavit wherein he averred to be issuing bogus bills without supplying any material. The AO , therefore, treated alleged purchases of Rs. 28,60,676/- made from Shah Enterprises as bogus and added the same to income of the assessee by invoking provisions of Section 69C of the 1961 Act. Purchases from Yash Impex, Kandivili The assessee had shown purchases to the tune of Rs. 41,34,364/- from this party. Notice issued by the AO u/s 133(6) to this party returned unserved. The assessee submitted that this party is supplying flex and other raw material wherein margin is very thin due to fierce competition. The assesse....
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....t even after getting supplies, they were not aware from which concern they will get bill from and it was as per wish of that person on whom order were placed, the bill used to come from. It was stated that the assessee never placed an order on these concerns and it was further stated that the assessee never had business relations with these concerns except receiving bills from these companies. It was also stated that the material covered by these invoices were imported material and there was no major Indian supplier for all these materials. It was further stated that the assessee was forced to buy these material from grey market and to account for purchase, the bills were obtained from these parties. The assessee in response to statement of Mr Kishore Shah, Director of the assessee submitted that it used to buy material through brokers who supplies goods at premises. The broker used to issue the bills and the assessee made the payment. It was submitted that the payments are genuine and the assessee does not know the suppliers. It was submitted that just because, the assessee does not know the supplier will not made these transactions as not genuine. The assessee duly filed copies ....
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....turned unserved. These parties could not be produced by the assessee before the authorities below nor the assesses could supply correct addresses of these parties. These purchases are appearing in the books of the assessee and there is an uncontroverted admission by the Director that only bills were obtained from these parties while the material which was imported was obtained from grey market. Thus, under these circumstances not only did assessee obtained advantage of lower prices by obtaining material from grey market without bill but also got advantage of VAT/CST and also custom duty on imported material in the form of basic custom duty, additional duty, CVD etc. while at the same time inflated purchase bills were obtained. Thus, in such cases book results are not reliable and an estimation of profits embedded in purchases is to be done which involves estimation which should be fair and honest. The reliance is placed on the decision of Hon‟ble Gujarat High Court in the case of CIT v. Bholanath Ploy Fab Private Limited reported in (2013) 355 ITR 290(Guj.) , wherein Hon‟ble Gujarat High Court held as under: "6. We are of the opinion that the Tribunal committed no er....