TaxTMI 
TaxTMI 
2020 (2) TMI 777
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....(A) erred in allowing the relief to the assessee merely on the basis that the payments against alleged purchase has been made through banking channel and hence holding that purchases are genuine despite the fact that the alleged parties are non-existent? 2. Whether in the facts find in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition @ 2% of alleged bogus purchase without appreciating the facts the AO after elaborately considering and discussing all relevant facts made addition @ 12.5% which is evident from the assessment order u/s. 143(3) r.w.s. 147 of the Act. 3. Briefly stated, the facts of the case are that the assessee, a manufacturer of resins adhesives filed its return of income for the assessment year (AY) 2009-10 on 19.09.2009 declaring total income at Rs. 32,58,979/-. The return was processed u/s 143(1) of the Act. On receipt of information from the Sales Tax Department, Government of Maharashtra that the assessee has obtained bogus purchase bills of Rs. 8,16,358/- from Emkey Engineers and Rs. 2,78,42,777/- from SB Industries during the financial year 2008-09, the AO re-opened the assessment by issuing notice u/s 148 d....
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....on the plant and machinery. Therefore, he deleted the addition of Rs. 8,16,358/- made by the AO. 4.1 In respect of purchases of Rs. 2,78,42,277/- made from SB Industries, the Ld. CIT(A) observed that as per the stock statement that assessee has entered into trading activity and purchases from SB Industries were sold ; the payment for the same was made through banking channels ; it is not brought on record whether the payment made through banking channels is not genuine. Observing that since the GP margin of the assessee in trading activities low, he restricted the disallowance to 2% of the purchases of Rs. 2,78,42,777/- which comes to Rs. 5,54,420/-. 4.2 Regarding the purchases of Rs. 50,04,407/- from New Planet Trading Co. Ltd., the Ld. CIT(A) observed that disallowance is made upon the general statement of Shri Pravin Kumar Jain, wherein it is stated that accommodation entries were provided; there is no specific statement wherein Shri Jain has mentioned that the transaction of the assessee is bogus. Therefore, he deleted the addition of Rs. 50,04,407/- made by the AO. 5. Before us, the Ld. Departmental Representative (DR) submits that in the instant case, information ....
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.... AO the purchase bills and also stated that the payments have been made through account payee cheques. Having examined the facts of the case, we are of the considered view that the decision in the case of M/s Mohommad Haji Adam & Co. (supra) relied on by the Ld. counsel, has relevance here. In that case, during the course of survey operations in the case of entities from whom the assessee had claimed to have made purchases, the Department collected information suggesting that such purchases were not genuine. The AO noticed that the assessee had shown purchases of fabrics worth Rs. 29.41 lakhs from three group concerns, namely M/s Manoj Mills, M/s Astha Silk Industries and M/s Shri Ram Sales and Synthetics. On the basis of statement recorded during such survey operations, the AO concluded that the selling parties were engaged only in supplying the bogus bills, that the goods in question were never supplied to the assessee, and therefore, the purchases were bogus. He, therefore, added the entire sum in the hands of the assessee as its additional income. The assessee carried the matter in appeal before the CIT(A), who accepted the factum of purchases being bogus. However, he compar....
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...., the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- "So far as the question regarding addition of Rs. 3,70,78,125/- as gross profit on sales of Rs. 37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of Rs. 3,70,78,125/....
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....148 dated 22.03.2014.In reply vide your letter dated 29.03.2014 has stated to consider the return of income for A.Y. 2009-10, filed on 19.09.2009 to be considered as return in response to the notice u/s 148. 2. Further vide your letter received in this office on 29.03.2014 you have brought the reasons recorded for reopening. In this regard, reasons recorded prior to issuance of notice u/s.148 are as under: 'In this case, a letter was received from office of DGIT(Investigation), Mumbai alongwith the details of information received in respect of bogus purchases made by various companies. On a perusal of the details, it is found that M/s.D.R.Coats Ink & Resins Pvt Ltd has made bogus purchases of Rs. 2,86,59,135/-for F. Y.2008-09 (A. Y.2009-10)from the following party: Name of the company PAN F.Y. Amount EMKEY ENGINEERS AABPD9450A 2008-09 816358 S.B. INDUSTRIES ACMPN8397D 2008-09 27842777 Total 2,86,59,135 In the case of M/s. D.R. Coats Ink & Resins Pvt Ltd, Assessment proceedings for A.Y. 200-10 were completed u/s 143(1) on 02.11.2010 at total income of Rs. 32,58,980/-. Since the information regar....