TaxTMI 
TaxTMI 
2020 (12) TMI 293
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.... the addition of Rs. 2,69,38,787/- made on account of bogus purchases ignoring the fact that the assessee during the course of survey proceedings as well as during the course of assessment proceedings had not been able to furnish any evidence to negate these clinching evidences by producing these purchase parties with the relevant books of accounts/documents to show that the materials allegedly supplied by these hawala parties were indeed consumed 2. Whether on the facts and in the circumstances of the case and in law the Ld. C.I.T. (A) erred in directing the Assessing Officer to delete that addition made on account of bogus purchases ignoring the fact that ii is a settled provision of law that the onus is upon the assessee to prove the genuineness of the alleged purchases. 3. the appellant prays that the order of the CIT(A) on the grounds be set aside and that of the assessing officer be restored. 4. the appellant craves leave to add, amend or alter all or any of that grounds of appeal which may be necessary." 2. Briefly stated, the assessee which is engaged in the business of trading in various goods and is a contractor for garden development and mai....
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....ties were not available at their given addresses also strengthened the aforesaid conviction of the A.O. As observed by the CIT(A), the A.O on the basis of the aforesaid combined reasons had concluded that the impugned purchases claimed by the assessee to have been made from the aforementioned parties were not genuine and added the value of the same to the returned income of the assessee. To sum up, as observed by the CIT(A), the aforesaid addition towards bogus purchases was made in the hands of the assessee on the ground that the aforementioned parties from whom purchases were claimed by the assessee to have been made were enlisted on the sale tax website as suspicious hawala dealers and the notices issued to them by the A.O under Sec. 133(6) were either returned unserved or no reply was received in compliance thereto. At the same time, it was observed by the CIT(A) that the assessee in order to support the genuineness of the aforesaid purchase transactions had placed on record the following documentary evidence: (a) Ledger Account confirmation of all the parties alongwith copies of invoices issued. (b) Copies of purchase orders; (c) Proof of payment mad....
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....ed purchases as against their consumption in the course of execution of the aforesaid government work orders. To sum up, it was observed by the CIT(A) that the assessee had established that the goods so purchased from the aforementioned parties were in fact consumed while executing the BMC contract, and thus, formed part of its duly accounted sales for the year under consideration. Observing, that though the assessee had failed to discharge the onus as was so cast upon him as regards proving the genuineness of the purchase transactions with the aforementioned parties, the CIT(A) was of the view that it remained as a matter of fact borne from the records that the factum of consumption of such goods in execution of the works contract by the assessee was however proven to the hilt. Backed by his aforesaid observations, the CIT(A) was of the view that as the assessee had failed to fully discharge the onus that was cast upon him and therein substantiate the genuineness and veracity of the purchases which were claimed to have been made from the aforementioned parties, it could, thus, safely be concluded that the possibility of inflated purchases/cost could not be ruled out. In the backdr....
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....e rate of 12% as was upheld by the Tribunal in the assessee‟s own case for A.Y. 2010- 11, therefore, no further addition was called for in his case for the year under consideration. On the basis of the aforesaid observations the CIT(A) deleted the addition of Rs. 2,69,38,787/- made by the A.O. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We find that the assessee respondent despite having been put to notice about the hearing of the appeal has however failed to put up an appearance before us. Accordingly, in the backdrop of the aforesaid facts, we are constrained to proceed with as per Rule 25 of the Appellate Tribunal Rules, 1963, and therein dispose off the appeal after hearing the appellant revenue and perusing the orders of the lower authorities. 6. The ld. Departmental Representative (for short "D.R‟) relied on the order passed by the A.O. It was submitted by the ld. D.R that the CIT(A) had erred in dislodging the well reasoned order passed by the A.O. It was averred by the ld. D.R that as the assessee had failed to substantiate the genuineness of purchase transactions under consideration, therefore, t....
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.... hands of the assessee. 8. As observed by us hereinabove, the CIT(A) noticed that his predecessor while disposing off the appeal in the assessee‟s own case for the immediately succeeding year i.e A.Y. 2010-11, wherein identical facts as regards impugned bogus purchases were involved, had estimated a G.P rate of 12% as a yardstick in respect of the unverified purchases made by the assessee in his garden maintenance and development segment of business. Observing, that the assessee during the year under consideration had already declared a gross profit rate of 14.23% insofar the garden development and maintenance segment of his business was concerned, the CIT(A) was of the view that no separate addition was called for in the hands of the assessee. The CIT(A) while concluding as hereinabove, had observed, that the view taken by his predecessor in the assessee‟s own case for A.Y. 2010-11 was thereafter upheld by the Tribunal and the department‟s appeal was dismissed in ITA No. 5220/Mum/2014, dated 10.08.2017. In sum and substance, the CIT(A) finding that identical facts were involved in the case of the assessee for the year under consideration as were there be....
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....2,69,38,787/- is deleted. Ground No. 5 and 6 of grounds of appeal are thus, allowed." We have given a thoughtful consideration and find no infirmity either in confirming of the addition by the CIT(A) to the extent of the profit which the assessee would had made by procuring the goods from unverified parties, nor the methodology adopted by him for quantification of such profit element. In fact, we find no reason to take a view different from that arrived at by the Tribunal while disposing off the appeal in the assessee‟s own case for A.Y. 2010-11 in ITA No. 5220/Mum/2014, dated 10.08.2017. As observed by us hereinabove, the CIT(A) while disposing off the assessee‟s appeal for A.Y.2010-11 had after analyzing all the facts of the case had estimated a G.P rate of 12% in respect of the garden maintenance and development segment. The aforesaid order of the CIT(A) was thereafter upheld by the Tribunal. As in the case before us the assessee had already declared a G.P rate of 14.23% which is already more than the rate 12% as had been approved by the Tribunal in the assessee‟s own case for A.Y. 2010-11, we, therefore, finding no reason to take a different view respect....
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....he following 17 parties aggregating to an amount of Rs. 4,19,59,365/-: Sr. No. Name of the Party Amount (in Rs.) 1. Karan Enterprises 1,73,000 2. K.K. Enterprises 36,75,748 3. Mahalaxmi Enterprises 11,60,801 4. Mahavir Engineering Works 1,65,994 5. Manibhadra Enterprises 13,275 6. Parsvanath Enterprises 11,953 7. Parsvanath Enterprises TG 71,748 8. Pearl International 2,61,44,693 9. Royal Enterprises 70,830 10. Royal Enterprises TG 4,07,093 11. Sambhav Traders 15,29,907 12. Vatika Trading Company 6,22,460 13. Sunico Traders 4,02,370 14. Arihant Traders 1,02,120 15. Amrutlal Sales Pvt. Ltd. 34,160 16. Sivamani Traders Pvt. Ltd. 7,97,690 17. V3 Enterprises 65,75,553 Total 4,19,59,365 As the assessee failed to discharge the onus that was cast upon him insofar proving to the hilt the genuineness of the purchase transaction under consideration was concerned, the A.O, therefore, added the same as an unexplained expenditure under Sec. 69C of the Act. 13. On appeal, the CIT(A) after exhaustive deliberations a....
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....amount of Rs. 26,32,187/- as against Rs. 4,19,59,365/- made by the A.O. 14. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. Admittedly, it is a matter of fact borne from the record that the assessee had failed to substantiate the veracity of his claim of having made purchases from the aforementioned hawala parties. In fact, the assessee by not assailing the order of the CIT(A) any further before us, had thus, admitted to the fact of unverifiability of the impugned purchases. Issue before us is confined to two aspects, viz. (i) that as to whether the CIT(A) is right in restricting the addition to the extent of profit which the assessee would had made by procuring goods at a discounted value from the unverified suppliers; and (ii) that as to whether the quantification of profit by the CIT(A) is justified. As the sales corresponding to the impugned purchases had duly been accounted by the assessee in his books of accounts, and the same after verification had been accepted by the department, therefore, we concur with the view taken by the CIT(A) that the addition as regards such impugned purchases was liable to be restricted only ....
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....95,725 12% 1,17,47,487 1,26,87,558 Nil Total Rs. 12,85,42,029 1,48,22,117 1,31,30,001 26,32,187 We have given a thoughtful consideration and find that the CIT(A) while concluding as hereinabove had followed the view that was taken by his predecessor in the assessee‟s own case for A.Y. 2010-11, which thereafter had been upheld by the Tribunal. In our considered view, the very basis for the estimation carried out by the CIT(A) is the gross profit rate adopted by his predecessor while disposing off the appeal in the assessee‟s own case for A.Y.2010-11 and that of his related concerns, which thereafter had been upheld by the Tribunal. In the backdrop of the aforesaid facts we find no infirmity insofar the methodology adopted by the CIT(A) for estimating the profits which the assessee would have made from carrying out the purchases from unverified suppliers. In fact, finding no reason to take a different view from that arrived at by the coordinate bench of the Tribunal that was followed by the CIT(A), we uphold his order. 15. Resultantly, the appeal filed by the revenue is dismissed. A.Y: 2012-13 ITA No.3515/Mum/2019 16. We....
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.... 6,74,144 13. Swastik Corporation 15,18,500 14. Hariom Enterprises 58,800 Total 5,69,49,153 As the assessee could not substantiate the genuineness and veracity of the aforesaid purchases transactions, the A.O, therefore, added the entire amount of the impugned purchases of Rs. 5,69,49,153/- as unexplained expenditure under Sec.69C of the Act. 19. On appeal, the CIT(A) restricted the addition to the extent of the estimated profit which the assessee would have made from making purchases from unverified suppliers. Further, for the purpose of quantification of the profit which the assessee would have made by procuring the good the CIT(A) followed the view that was taken by his predecessor while disposing off the assessee‟s appeal for A.Y. 2010-11. It was noticed by the CIT(A) that the view taken by his predecessor was thereafter affirmed by the Tribunal in its order passed in ITA No. 5220/Mum/2014, dated 10.08.2017. Also, the CIT(A) drew support from the view taken by his predecessor in the case of certain related parties of the assessee. On the basis of his aforesaid deliberations the CIT(A) confined the addition in respect of the two busi....
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....same. Accordingly, on the basis of the gross profit rate declared by the assessee in his various business segment during the year under consideration, viz.(i) cloth trading; and (ii) garden development and maintenance segment, as against that adopted by his predecessor while disposing off the appeal of the assessee for A.Y.2010- 11 as well as the those in the case of its related parties which thereafter had been upheld by the Tribunal, the CIT(A) had worked out the estimated addition in the hands of the assessee. In our considered view, the CIT(A) had adopted a logical basis for estimating the profit which the assessee would had made by booking purchases from unverified sources in his books of accounts. For a fair appreciation of the view taken by the CIT(A), we herein reproduce his observations as under: "7.12 In the present case, I find that there are basically two types of transactions whereby such purchases parties could not be verified; (1) Cloth Trading items and (2) Garden Maintenance contract. Further, my predecessor CIT(A) vide order dated 30.05.2014 for AY. 2010-11 in assessee's own case, has already considered the identical issue of bogus purchases and ha....
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.... "1. Whether the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in directing the Assessing Officer to restrict the addition of Rs. 17,97,935/- made on account of bogus purchase ignoring the fact that the assessee during the course of survey proceedings as well as during the course of assessment proceeding had not been able to furnish any evidence to negate these clinching evidences by producing these purchase parties with the relevant books of accounts/documents to show that the materials allegedly supplied by these hawala parties were indeed consumed. 2. Whether on the facts and in the circumstances of the case and in law the Ld. C.I.T. (A) erred in directing the Assessing Officer to restrict the addition made on account of bogus purchases ignoring the fact that it is a settled provision of law that the onus is upon the assessee to prove the genuineness of the alleged purchases. 3. The appellant prays that the order of the CIT(A) on the grounds be seaside and that of the assessing officer be restored. 4. The appellant craves leave to add, amend or alter all or any of the grounds of appeal which may be necessary." 24. ....
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....omplete quantitative details and stock records which were examined by the A.O during the course of the survey as well as in the assessment proceedings. Accordingly, the CIT(A) in the backdrop of his aforesaid observations concluded that the addition in the hands of the assessee was liable to be restricted only to the extent of the profit (estimated) as regards the impugned purchases made by the assessee from the unverified suppliers. 27. We have given a thoughtful consideration and are persuaded to subscribe to the view taken by the CIT(A) that the addition in the hands of the assessee was liable to be restricted only to the extent the assessee would had benefited from purchasing the goods at a discounted value from the unverified suppliers, and thus, inflated the corresponding purchases on the basis of accommodation bills procured from the aforesaid hawala parties. It is a matter of fact borne from the records that the assessee had established that the impugned purchases were consumed in the course of his business and formed part of his duly accounted sales. In fact, as observed by the CIT(A) the sales accounted for by the assessee in his books of accounts were verified by the ....
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....bove, had observed, that the view taken by his predecessor in A.Y.2010-11 was thereafter upheld by the Tribunal in ITA No.5220/Mum/2014, dated 10.08.2017, and the appeal of the department was dismissed. Accordingly, the CIT(A) taking cognizance of the fact that in A.Y. 2010-11 his predecessor had adopted a gross profit rate of 12% for the purpose of estimating the profit as regards the unverified purchases made by the assessee in his garden development and maintenance business segment, had thus adopted the same methodology and in the backdrop of such comparative analysis worked out the addition of the deficit gross profit in the hands of the assessee to the extent of Rs. 1,50,223/-. The CIT(A) while observing as hereinabove had observed as under: "7.11 In the present case, I find that my predecessor CIT(A) vide order dated 30.05.2014 for A.Y 2010-11 in assessee‟s own case, has already considered the identical issue of bogus purchases and has adopted a gross profit rate of 12% for garden development and maintenance contract after analyzing all the facts of the case in detail and such gross profit rate of 12% has also been upheld by Hon'ble ITAT. I do not f ind any....