TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 755
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....rmed that they were providing accounting entries and the transactions in their names were bogus. It was submitted by ld.AR that the assessee does not have evidence to prove that the transactions specifically on account of fact that the business of the sellers have closed. It was a submission that the purchases have also been included in the stock and the same have also been sold and if at all what is disallowable was only the gross profit in respect to the transactions. It was a further submission that in fact, no addition was liable to be made in view of the decision of the Co-ordinate Bench of this Tribunal in the case of M/s.VBC Jewellery Vs. The DCIT, in ITA NOs.653,654, 1464 & 1465/Chny/2017 dated 24.10.2018 wherein it had been held as follows:- "10. We have considered the rival contentions and perused the orders of the authorities below. Purchases made by the assessees, from M/s. Mohit Enterprises, M/s. Maan Diamonds, M/s.Rajan Diamonds and M/s. Marvin Enterprises were considered as bogus, based on Investigation done by the Department on a group headed by one Shri. Bhanwarlal Jain pursuant to a search conducted in their premises on 03.10.2014. What we find is that Revenue ....
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....s not sustainable in light of Hon'ble jurisdictional High Court decision in the case of Nikunj Enterprises. We further note that the Assessing Officer has also himself not done any investigation and enquiry. The assessee's request for cross examination has not been entertained by the Assessing Officer. In these circumstances, 6% disallowance of bogus purchase sustained by the Commissioner of Income Tax (Appeals) is appropriate and does not need any interference on our part. Both the Id. Counsel also fairly agreed to this proposition''. Assessees have also submitted that its gross profit including that of purchases considered by the lower authorities as bogus, came to 8.91% to 20.88% for the impugned assessment years. Even if we accept the contention of the Revenue that 25% mark up was justified based on the judgment of Gujarat High Court in the case of Sanjay Oil Cake Industries (supra), what could at the best be added is only the shortfall between declared gross profit and the estimated gross profit of 25%, and such shortfall fell within the range of 5 to 6%. In such circumstances, in order to give a quietus to the matter, we are inclined to follow the decision of Mumba....
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.... (i) Opening Stock : 376212.920 3(ii) Purchases during the previous year : 1972992.000 (iii) Sales during the previous year : 1983006.000 (iv) Closing Stock : 366198.920 (v) Shortage/excess, if any : 0.000 The above quantity particulars were not found to be incorrect by ld. Assessing Officer. It is clear from the above, that assessee had maintained records which gave the quantity of granules in stock, its purchases and its sales. As mentioned by the ld. Authorised Representative, the sales made by the assessee were never disbelieved. In our opinion, assessee could not have effected the sales without corresponding purchases. If the Revenue disbelieved the purchases the corresponding quantity ought have been reduced from the sales also. In our opinion, the ld. Assessing Officer fell in error in disbelieving the purchases while accepting the quantity of plastic granules sold by the assessee, that too without rejecting the books of the assessee. It is not disputed that assessee had produced the bills for all purchases and these were paid through banking channel. Just because the notices to vendors of the assessee came back unservd, the purchases could no....
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.... Ramesh Kumar and Co.(supra) have held that the Assessing Officer was not justified in making additions merely on the basis of information obtained from the Sales Tax Department of the Government of Maharashtra without conducting any independent enquiries. Before the CIT(Appeals), one of the points raised by the assessee was with respect to an opportunity to cross examine the four parties, but we find that no such opportunity have been allowed. Considering the entirety of facts and circumstances of the case and the aforesaid precedents, which have been rendered under identical circumstances, in our view, the CIT(Appeals) erred in sustaining the addition to the extent of Rs. 4,19,356/- instead of deleting the entire addition of Rs. 9,68,937/- made by the Assessing Officer. We direct accordingly''. Considering the facts and circumstances of the case, we are of the opinion that purchases could not have been considered as bogus. Disallowances made for the impugned assessment years stand deleted. Related grounds are allowed." Ld.AR submitted that in fact the addition itself was not called for and in the worst case what could be added was only gross profit. It was a prayer that the ....