AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 659
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....ncome Tax Act, 1961 was conducted on 19.10.2011 on the premises of the assessees comprising Agarwal Associates & Jainco Group of cases. In view of search operation, the group cases were centralized to Central Circle, Ghaziabad. The premises covered u/s 132 of the Income Tax Act, 1961 (in short "Act") operation were Bharat Bhawan, 10, New Rajdhani Enclave, Vikas Marg, Preet Vihar, Delhi, GF - 16, Kasturba Gandhi Marg, Cannaught Place, New Delhi (Opposite British Council). The jurisdiction order uls 127 of the Income tax Act, 1961, in this case was passed by the Ld. Commissioner of Income Tax, Delhi - I, New Delhi communicated vide F. No. CIT - I1Centralization/20 13- 14/2816 dated 16.09.2013. Subsequently, notice u/s 153A was issued on 30.09.2013. The assessee filed return of income on 13.12.2013 declaring total income of Rs. 3,65,12,490/-. Notice. under section 143(2) was issued on 13.12.2013. Notice U/s J42(1) alongwith questionnaire was already issued on 03.12.2013. IN response to the same, the AR of the assessee attended the proceedings and filed the necessary supporting documents. The assessee is engaged in business of real estate development and related activities specificall....
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....k Limited, Ghaziabad. A perusal of this account shows that the said account is also in the name of Mis Meet Enterprises with address at B - '262, Nand Gram. GDA Colony, Ghaziabad. Enquiries from Trade Tax Department revealed that the Prop. Of firm M/s Meet Enterprises, Ramdham Colony, Shivalik Nagar, Hardwar, Tin No. 05006640257 is Shri Vikas Kumar S/O Vijay Pal Singh Rio 464/A, Keshavpuri, Muzaffarnagar. Mr. Vikas Kumar was examined and he stated that he used to run the business of Meet Enterprises and that he only had one transaction in which he sold goods to National Trading Company, Roorkee and that he had no other business transactions. He also declined to have any other bank accounts except saving bank no. 033000100362580 in PNB. New Mandl, Muzafarnagar. You are required to explain the genuineness of expenses claimed on account of purchase of steel amounting to Rs. 3714973/- should not be treated as bogus expenditure and why the same should not be disallowed and added to the income; Furnish complete address of M/s Tehri Steels Ltd alongwith copy of account and copies of bills for supply of steels during the year. -Also furnish confirmation of account with PAN/assessment....
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....hrough their project manager at site. So in these circumstances your are requested not to treat as bogus expenditure." 2.2 The AO observed that the assessee failed to furnish confirmation from the Meet Enterprises, even TIN no. was not verifiable. The assessee's submission was not supported by third party evidence and therefore, the expenditure treated as unexplained and unverifiable. Therefore, the expenses claimed on account of purchases amounting to Rs. 37,14,973/- from Meet Enterprises was disallowed and added to the income and assessed the income of the assessee at Rs. 4,04,06,190/ u/s. 143(3)/153A of the I.T. Act, 1961 vide order dated 30.3.2014 passed by the AO. Against the assessment order, assessee is in appeal before the Ld. CIT(A), who vide his impugned order dated 22.12.2015 has upheld the action of the AO and dismissed the appeal of the assessee. Aggrieved with the impugned order, assessee is in appeal before the Tribunal. 3. At the time of hearing, Ld. Counsel for the assessee has stated that the legal issue is covered in the favour of the Assessee by the decision of the Hon'ble High Court of Delhi in the case of CIT vs. Kabul Chawla (2015) 61 Taxman.com 412 (D....
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....AT, Delhi 'E' Bench in ITA No. 7022/Del/2014 (AY 2008- 09) vide order dated 29.4.2019 in the case of M/s Mansarovar Infratech Pvt. Ltd. (Formerly known as Garhwal Mandal Sales Pvt. Ltd.) vs. ACIT has directed the Assessing Officer to restrict the disallowance to the tune of 5% of the impugned purchases wherein the same party M/s Meet Enterprises was involved. Hence, the aforesaid case of M/s Mansarovar Infratech Pvt. Ltd. is squarely applicable in the present case. For the sake of convenience, we are reproducing hereunder the relevant paras of the Tribunal's order dated 29.4.2019 in the case of M/s Mansarovar Infratech Pvt. Ltd. wherein the tribunal on exactly similar issue has directed the AO to restrict the disallowance to 5% of the impugned purchases from the same party i.e. M/s Meet Enterprises, which also involved in the present case. "4. Grounds Nos. 2 and 3 relate to addition of Rs. 32,76,741/- representing the purchases made by the assessee company and held to be an accommodation entry . 4.1 Before us, the learned counsel for the assessee filed two paper-books containing pages from 1 to 104 and 105 to 129 and contended that denial of deduction or genuineness of purchase....
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....Reliance was placed on the following judgments: i) CIT vs. Precious Jewels Corporation 205 Taxman 22 (Raj)(MaG.) ii) ACIT v. Karam Chand Ruber Industries ITA No. 6599/ D/ 2014 iii) Manoj Sharma v.!TO 103 taxmann.com 105 (Del) iv) CIT v. Nikunj Eximp Enterprises (P) Ltd. 372ITR 619 (Bom) v) CIT v. Simii P. Seth Tax No. 553/203 (Gu}) dated 16.3.2013 4.3 On the contrary, the learned DR supported the action of the authorities below and relied on the following judgments: i) N.K. Proteins Ltd. vs. CIT (2017-TIOL-23-SC-1T) ii) N.K. Industries Ltd. Vs. DCIT 292 CTR 354 (Guj) iii) CIT vs. Arun Malhotra 363 ITR 195 (Del) iv) CIT vs. La Medica 250 ITR 575 (Del) v) Vijay Proteins Ltd. vs. ACIT 58 taxmann.com 44 (Gu}) vi) Sanjay Oilcake Industries vs. CIT 316 ITR 274 (Gu}) 4.4 We have considered the submissions and perused the material on record. During the instant year, it is a matter of record that assessee has declared sales of Rs. 9,99,91,142/ - and purchases of Rs. 9,90,26,702/- from trading of M.S Bar. It is also noted that books of account are duly audited under section 44AB of the Act. It is also noted that out of the total purchases, purchases of Rs. 32,76,7....
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....rom another party i.e. accommodation entry provider. Thus, the purchases themselves cannot be said to be bogus as the same is duly recorded in the books of account of the appellant and such books stands accepted even in the impugned order of assessment. 4.6 We are of the opinion that the entire amount should not be disallowed but the disallowance should be restricted to the profit margin embedded in such amount. This view is also supported by the judgment of Gujarat High Court in the case of CIT vs. Bhola Nath, 355 ITR 290. The relevant portion of the order is as under: "6. We are of the opinion that the Tribunal committed no error. Whether the purchases themselves were bogus or whether the parties from whom such purchases were allegedly made were bogus is essentially a question of fact. The Tribunal having examined the evidence on record came to the conclusion that the assessee did purchase the cloth and sell the finished goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. This was the view of this court in the case of Sanjay Oilcake Industries v. CIT report....
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....Appeals) believed the assessee's theory that the purchases were not bogus but were made from the parties other than those mentioned in the books of account 7. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. So much is clear by the decision of this court In particular, the court has also taken a similar view in the case of CIT v. Vijay M. Mistry Construction Ltd. [2013J 355 ITR 498 (Guj) and in the case of CIT v. Bholanath Poly Fab (P.) Ltd. [2013] 355 ITR 290 (Guj). The view taken by the Tribunal in the case of Vijay Proteins Ltd. v. Asstt CIT [1996] 58 ITD 428 (Ahd.) came to be approved." 4.9 In the instant case, the assessee is engaged in dealing in MS Bar (Iron/ Steel Product) and has shown gross profit rate of 5.22%. We find that in the case of Sh. Sanjay H. Shah, Mumbai Vs. Income Tax Officer in ITA No.5063 to 5065/Mum/2017 for assessment year 2009-10 to 2011-12, who was also engaged in payment and some entries were obtained from certain suppliers who had not sold such goods. 6. The present case, thus, being one of only purchase but not from disclosed sources, it....
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....sion claimed that VAT rate is only 4%. The rate of VAT is not disputed by Revenue. In our view considering the nature of trade of assessee and the facts of the present case, the disallowance made by AO and sustained by Id. CIT(A) is excessive and unreasonable. In our view the assessee has given sufficient evidences to substantiate its purchases, on which no finding was given by the lower authorities. Moreover, no incriminating material is brought on record except assumption and presumption of AO that assessee has availed accommodation bills. The addition of alleged bogus purchased are based on third party information. We are of the considered opinion that under Income Tax Act only real income can be taxed by the Revenue. We may further note that even in cases where the whole transaction is not verifiable due to various reasons, the only taxable is the taxable ITA No. 5063/ Mum/ 20 17 to 5065/ Mum/ 2017 Shri Sanjay H Shah income component and not the substantial part of the transaction. Thus, keeping in view the assessee has paid the VAT at the applicable rate on all the purchases. Further, in our view no yardstick formula can be applied while assessing the amount of revenue leakage....