TaxTMI 
TaxTMI 
2017 (9) TMI 1919
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....on facts in disallowing the addition of Rs. 4,92,975/- by estimating 12.5% as profit element on the alleged bogus purchase from two parties amounting to Rs. 39,43,800/- . (2) The Appellant humbly prays that the addition made by the Ld. A.O. & partly confirmed by Ld. CIT(A) may please be deleted and relief be granted." 3. The brief facts of the case are that the assessee is manufacturer of weaving quality glass fibre yarn. The assessee filed its return of income u/s 139(1) on 24th September, 2011 which was processed by Revenue u/s 143(1) of the Act on 07th March 2013. The assessee's case was reopened by the AO u/s 147 of the Act by issuance of notice dated 22-03-2013 issued by the AO u/s 148 of the Act for the following reasons:- "Information received from DGIT (lnv.) that the assessee is involved in booking of bogus purchase for FY 2010-11 from the following Hawala Operators. The list of havala operators (bogus bills issuers) was identified by Sales Tax Department, Statements of the Hawala Operators have also been recorded by the Sales Tax Department and the information has been shared with the office of the DGIT (Inv.) Mumbai. The office of DGIT (Inv.....
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....n supply material after sourcing the same from various suppliers. It was explained that the bills and other supporting documents were of third parties and the payments were made to the parties whose bills were submitted by the brokers . The assessee submitted that it was not aware of the genuineness of the bill issuing parties. The assessee further submitted that non-payment of sales tax by these vendors which led to these vendors being declared as hawala dealers by Maharashtra VAT authorities does not make the purchases non-genuine. It was also submitted that just because the parties are not traceable will not make purchase as bogus purchases. The A.O., however, rejected the contentions of the assessee. The A.O. observed that these parties have deposed before the Sales Tax Authorities on oath that they were engaged in hawala operations and only issuing bills without any actual supply of goods. The AO observed that the assessee could not produce brokers before the AO nor their name, PAN, address etc. were submitted. It was observed by the AO that no commission payments were made by assessee to these brokers for arranging the purchases. It was also observed by the AO that the ass....
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....on of these parties were not provided by the AO to the assessee and principles of natural justice are vitiated. It was also the contention of learned counsel for the assessee that since no notice u/s 133(6) or summons u/s 131 were served on these hawala dealers , the purchases cannot be treated as non genuine . The learned CIT(A) partly allowed the appeal of the assessee whereby an addition of 12.5% of the amount of the alleged bogus purchases was sustained by the learned CIT(A) , whereby an amount of Rs. 4,92,975/- was added to the income on account of bogus purchases and balance amount of Rs. 5,10,455/- was deleted by learned CIT(A) , vide appellate order dated 18-01-2017. While passing an appellate order dated 18-01-2017 , the learned CIT(A) relied upon the decision of Hon'ble Gujarat High Court in the case of CIT v Simit P Shah 38 taxmann.com 385(Guj HC) wherein part relief was granted to the assessee. 5. Aggrieved by the appellate order dated 18-01-2017 passed by the ld. CIT(A), the assessee is in appeal before the tribunal. 6. The learned counsel for the assessee submitted that the assessee is manufacturer of weaving quality glass fibre yarn. It is submitted by ld. coun....
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....tory register showing inward and outward quantities, dockets consisting of invoice for purchases, Goods receipt notes(GRN) , delivery challans duly endorsed at factory gates , lorry receipts , purchase orders , register maintained at factory gate wherein details of all material received, inventory of material produced by the assessee along with production details showing consumption of material was produced by the assessee before the AO during the course of re-assessment proceedings. It was also submitted that payments for these purchases were all made through banking channels. Thus, it was submitted that the assessee had duly discharged its onus to prove the genuineness of the purchases and there is no adverse remark by the authorities below so far as these evidences are concerned except that these parties were not produced. Further, the ld. counsel submitted that cross examination was sought of the said parties from the AO which was not allowed to the assessee. It was submitted that the A.O. only relied upon the Maharashtra VAT authorities information which is not sufficient to make disallowance and fastening of liability on the assessee on mere suspicion that the assessee has pu....
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.... u/s 147 and notice dated 22-03- 2013 u/s 148 of the Act was issued to the assessee for reopening of the concluded assessment within four years from the end of assessment year. The assessee has not challenged the reopening of the concluded assessment before the tribunal as no ground challenging legality and validity of reopening is raised before the tribunal. It is also not brought on record by learned DR that Revenue has filed any cross appeal challenging the relief granted by learned CIT(A). As could be observed from the records produced before the tribunal, the assessee had on its part produced details before the authorities below w.r.t. these parties like purchase invoice, purchase orders, delivery challans, copy of register maintained at factory gate, utilization/consumption detail, docket showing receipt of material and details of purchases and production details of raw material to finished goods . The assessee has also produced details of export of material and factory gate register before the authorities below . In our considered view, the assessee has discharged burden cast on it by bringing on record all details relating to the said purchases and its consumption /utilizat....
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....dealers have deposed that they are issuing bogus bills without supplying any material . The authorities below have not even considered appropriate to call these parties and record their statements u/s 131 of the 1961 Act or to seek incriminating evidences from these parties to fasten tax-liability on the assessee ever since the incriminating information was received by DGIT(Inv.) from Maharashtra VAT authorities. No such details of any incriminating information/evidences / statements recorded/collected by DGIT(Inv), AO or CIT(A) is on record. The Revenue cannot be allowed to play another innings more-so in the midst of large volume of uncontroverted evidences brought on record by the assessee. The AO made addition towards peak amount of these bogus purchases while learned CIT(A) has reduced it to 12.5% of alleged bogus purchases on the grounds that the profit embedded on these purchases need to be brought to tax by relying on decision of Hon'ble Gujarat High Court in the case of CIT v Simit P Shah 38 taxmann.com 385(Guj HC). It is also not brought on record by learned DR that the Revenue has come in appeal before the tribunal against relief granted by the learned CIT(A) . The asses....