2020 (1) TMI 851

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2020 (1) TMI 851

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....2010-11 and 2011-12. 2. Brief facts leading to filing of the present appeals are, the assessee company is engaged in the business of trading in ferrous and non-ferrous metals. For the assessment year 2010-11, the assessee filed its return of income on 29th September 2010, declaring total income of Rs. 61,47,739. Similarly, for the assessment year 2011-12, the assessee filed its return of income on 18th September 2011, declaring total income of Rs. 91,95,059. The returns of income filed by the assessee were initially processed under section 143(1) of the Act. Subsequently, on the basis of information received from the DGIT (Inv.), Mumbai, and the Sales Tax Department, Government of Maharashtra, the Assessing Officer found that the purchases....

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....ents including the decision of the Hon'ble Gujarat High Court in CIT v/s Simit P. Sheth, [2013] 356 ITR 451 (Guj.), he estimated the profit margin on the non-genuine purchases @ 12.5% and added back to the income of the assessee in both the assessment years. After completion of the assessments as aforesaid, the learned Principal CIT called for the assessment records for examination. After examining the assessment records, he was of the view that the assessment orders passed estimating the income on non-genuine purchases @ 12.5% is erroneous and prejudicial to the interests of Revenue, because, once the Assessing Officer has concluded that the purchases are bogus, he could not have estimated the income on such purchases by applying the rate ....

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..... (supra). 3. The learned Authorised Representative submitted, in course of assessment proceedings, the Assessing Officer had specifically enquired into genuineness of purchases made by the assessee. He submitted, during the assessment proceedings, the assessee had produced all supporting evidences including stock register and quantitative details of purchases and sales to not only prove the genuineness of purchases, but also to co-relate the purchases with sales. He submitted, the payments made towards purchases were through banking channel and corresponding bank statement was also furnished before the Assessing Officer to demonstrate such fact. He submitted, the Assessing Officer had also conducted enquiry independently by issuing notice....

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....arned Principal CIT on the decision of N.K. Proteins Ltd. (supra) is totally misplaced as the facts are completely distinguishable. Thus, he submitted, the assessment orders cannot be held to be erroneous and prejudicial to the interest of Revenue. Consequently, the orders passed under section 263 of the Act have to be declared as invalid. In support of such contention, the learned Authorised Representative relied upon the following decisions:- i) Malabar Industrial Co. Ltd. v/s CIT, [2000] 243 ITR 083 (SC); ii) CIT v/s Greenworld Corporation, [2009] 314 ITR 081 (SC); iii) CIT v/s Gabrial India Ltd., [1993] 203 ITR 108 (Bom.); iv) CIT & Anr. v/s Gokuldas Exports & Ors., [2011] 333 ITR 214 (Kar.); v) CIT v/s Sohana Woollen Mills, [....

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...., the Assessing Officer called upon the assessee to furnish supporting evidences to prove the purchases. It is evident, in response to the query raised by the Assessing Officer, the assessee did produce some evidences which of-course was not enough to satisfy the Assessing Officer regarding the genuineness of the transactions. Therefore, the Assessing Officer himself conducted enquiry by issuing notices under section 133(6) of the Act to the concerned parties. Thus, from the aforesaid facts it is very much clear that the Assessing Officer has not overlooked the information/material available on record. Therefore, allegation of learned Principal Commissioner that while completing the assessment the Assessing Officer overlooked the materials ....

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....te including the decisions of the Tribunal and the Hon'ble Jurisdictional High Court. In fact, the Hon'ble Jurisdictional High Court in Mohommad Haji Adam & Co. (supra) has held that even if the purchases are found to be bogus, however, the entire purchases cannot be added if the sales are not doubted or disputed. The Hon'ble Jurisdictional High Court held that in such circumstances, the addition can be made by applying the gross profit rate of normal purchases. Thus, in our considered opinion, the decision of the Assessing Officer in making addition applying the profit rate is in consonance with various judicial precedents available on the issue. Therefore, it cannot be considered to be an erroneous view as it is a possible vie....

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2020 (1) TMI 851