TaxTMI 
TaxTMI 
2020 (3) TMI 1161
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...., which is against the action of the Ld. CIT(A) confirming partly the addition [by restricting to GP @ 26.88% at Rs. 15,07,579/-] when the AO had added the entire bogus purchases to the tune of Rs. 56,08,544/-. 3. Brief facts of the case are that the assessee is a firm which is engaged in the trading activity and had filed the return of income disclosing total income of Rs. 13,98,720/- which was processed u/s. 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") by the CPC Bangalore on 16.02.2012. Later the AO received information that during search and seizure operation conducted by the DDIT(Inv.), Unit-4(2), Kolkata on 31.03.2016 in the case of one Shri Sanjiw Kumar Singh it revealed that Shri Sanjiw Kumar Singh is....
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....ged to substitute the evidence of bills from unregistered dealers from whom actual purchases were made. According to the assessee, the rate of purchase was inflated to convert the cost of arranging the bills from those suppliers to the extent of 4%. So, the excess cost claimed at 4% of Rs. 58,42,234/- which works out to Rs. 2,33,690/- was offered as undisclosed income in the IDS. The AO noticed that the Addl. CIT, Range-48 also has corroborated this fact that assessee had offered Rs. 2,33,960/- in the IDS scheme as undisclosed income for arranging the bills to the tune of Rs. 58,42,234/-. Thereafter, the AO gave opportunity to the assessee by issuing show cause as to why the entire amount disclosed to the IDS should not be treated as bogus ....
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.... a view that the entire unverified purchase are not rendered vulnerable for addition; only the element of profit embedded from such purchase should be considered for addition. The appellant had disclosed a GP of 26.88% for the AY 2011-12. Therefore, it would be reasonable to limit undisclosed profit embedded in the bogus purchase to 26.88% at Rs. 15,07,579/-. This undisclosed income embedded in bogus purchase amounting to Rs. 56,08,554/- has not been declared in IDS- 2016. The declaration under IDS-2016 made by the appellant is therefore not complete. The addition of Rs. 56,08,554/- is restricted to Rs. 15,07,579/-. This ground of appeal partly succeeds and is, therefore, partly allowed." 4. Still not being satisfied by the partial relie....
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....etting the bills by disclosure in the IDS scheme of 2016, no addition was warranted. Per contra, the Ld. DR supported the order of the AO as well as Ld. CIT(A) and submitted that when the assessee was confronted with the fact that assessee's purchases to the tune of Rs. 58 lakhs was bogus, it has duly accepted the same and, therefore, the AO has added the entire amount minus the amount declared in the IDS of Rs. 2.33 lakhs because bogus accommodation being bills generated for commission and no goods were passed on to the assessee and, therefore, he does not want us to interfere with the order of the authorities below. 6. We have heard rival submission and gone through the facts and circumstances of the case. We note that assessee is a go....
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....after detailed verification in respect of the quality and the quantity of the pipes/goods, the competent authority/Engineer certified it fit for payment and then only assessee received the income from contract work with Govt. which assessee has offered as income and the AO has accepted the sales figure shown by the assessee in full. It is also noted that AO did not doubt about the completion of installation of pipeline/contract work. In such a back-drop, the consumption of the pipes/goods required for successfully completing the laying/installation of pipelines cannot be doubted, because without pipes being supplied by assessee, the question of proper laying/installation of pipeline does not arise. 7. So in the light of the explanation g....