TaxTMI 
TaxTMI 
2020 (3) TMI 1337
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....essee has proposed following two questions as substantial questions of law for consideration of this Court : "(i) Whether the Income-tax Appellate Tribunal was right in law in confirming the addition of Rs. 46,25,927/- being 25% of the alleged bogus purchases of Rs. 1,85,03,709/- without any reason or basis? (ii) Whether the Income-tax Appellate Tribunal was right in law in deciding the appeal ex parte without providing the appellant a sufficient opportunity of being heard, which is in violation of the principles of natural justice, and may be directed to do so now?" 4. This Court on 10.02.2020 passed the following order: "Draft amendment is allowed. The same shall be allowed at the earliest. Let Notice for final disposal be issued to the respondent, returnable on 17th February, 2020. Direct service is permitted." 5. At the outset, the learned senior counsel Mr. Tushar Hemani assisted by Ms. V.K. Parikh submitted that the Tribunal has passed an ex parte order without giving an opportunity of hearing to the appellant-assessee. 5.1 It was submitted that the appellant-assessee would not remain present before the Tribunal because th....
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.... Oil Mills Group of Patan District agents and brokers etc. The department impounded books of accounts and all records connected with the business during the course of assessment proceedings. The Assessing Officer made an addition amounting to Rs. 5,67,49,767/- on account of bogus purchases and Rs. 1,13,84,071/- on account of undisclosed income. It was found that M/s Vishal Traders, Veerpur, District : Kheda and one Gayatri Cotton has issued bogus adjustment bills to various parties including the assessee. Shri Dharmendra Pandya, Proprietor of M/s Vishal Trades in his statement, admitted that M/s Vishal Traders was not in existence and that they used to issue adjustment/bogus bills to various parties including the assessee without delivery of the goods mentioned in the bills. The statement of Shri Dharmendra Pandya was also corroborated by the continuous pattern of deposit by cheques and immediate cash withdrawals in the various bank accounts of M/s Vishal Traders. The statement of Shri Dharmendra Pandya was also confirmed in the statement of Shri Madanlal Chandak (Shah) who introduced various parties to Shri Dharmendra Pandya. The submission of the partners of the assessee firm, Sh....
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....accountant to regularize billing, obtained from Vishal Traders and goods were delivered by other or actually purchase from agriculturists / farmers / cultivators." But in the assessment order purchases in the name of Gayatri Cotton Co were also added back and during the appellate proceedings, it is established that only bills were obtained also from sister concern - Gayatri Cotton Co. Most importantly the details submitted show that the appellant has purchased cotton seeds of the same amount i.e. Rs. 1,14,91,977 from Gayatri Cotton Co and Gayatri Cotton Co too, which is the partner's propriety concern has purchased cotton seeds of the same amount i.e. Rs. 1,14,90,977 from the appellant. Secondly, payments of purchases of Rs. 1,13,73,994 could not be proved through the bank account of the appellant. Thirdly, Gayatri Cotton Co had claimed heavy purchases which could not be substantiated from farmers / unregistered dealers, therefore bills issued by it to the appellant firm are nothing but accommodation entries obtained by the appellant firm. But this is also true that the entire purchases from Vishal and Gayatri cannot be treated bogus because sales and stock position have not be....
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....ed and department impounded books of accounts of survey proceedings. The assessee produced all the details called for and available with the assessee and AO had made addition amounting to Rs. 5,67,49,767/- on account of bogus purchases and Rs. 1,13,84,071/- on account of undisclosed income treated as admitted by assessee in the statement dated 01.09.2008. Thus, AO had made total additions of Rs. 6,81,33,838/- and total income was derived at Rs. 6,81,67,060/- raising the demand amounting to Rs. 3,08,05,816/-. In appeal, the CIT(A) confirmed the addition to the extent of Rs. 1,41,87,441/- i.e. @25% of alleged bogus purchases. Before the CIT(A), Shri Bhagwanbhai P. Patel appeared who is managing the business of the assessee company and made statement that bills were actually obtained from M/s. Visahl Traders, purchases actually made from directly agriculturist/farmers/cultivators to regularize billings and stated that bills are adjusted but purchases are not bogus because from the purchases subsequently, assessee has also made sale as sales have not been disputed by the revenue authorities. But CIT(A) has accepted the part plea of the assessee and gave relief to the assess....
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....noted that during the course of appellate proceedings, a letter dated 15.3.2012 had been received from the assessee wherein it had confessed that to regularise the billing, the accountant had obtained bills from Vishal Traders; whereas the goods were purchased from farmers/cultivators. The Commissioner (Appeals) found that the Assessing Officer had neither disputed the sales nor the stock position and, therefore, accepted the contention of the assessee that it had made purchases from farmers who did not issue the bills and to regularise those purchases had obtained bills from Vishal Traders. The Commissioner (Appeals) thereafter placed reliance upon the decision of the jurisdictional High Court in the case of Sanjay Oil Cake Industries v. Commissioner of Income-tax, 316 ITR 274, and directed the Assessing Officer to restrict the addition made on account of bogus purchases from Vishal Traders to 25% of Rs. 5,67,49,767/- which comes to Rs. 1,41,87,441/- and further directed the balance to be deleted. 9. The Tribunal in the impugned order has concurred with the findings of fact recorded by the Commissioner (Appeals) and has upheld the order passed by him. 10. From th....
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....ismissed." 13. In view of the above order passed by this Court, reliance is placed by the learned senior advocate for the appellant-assessee on the another order passed by this Court in Tax Appeal No.840 of 2013 to canvass that the Tribunal confirmed the restriction of the addition made by the assessing Officer to 5% of the total bogus purchases made from M/s Vishal Traders in case of Gujarat Ambuja Export Ltd. It was therefore, alternatively submitted that following the decision in case of Commissioner of Income Tax vs. Gujarat Ambuja Export Ltd. in Tax Appeal Nos.840 and 844 of 2013, the addition may be restricted to 5% of the bogus purchases made from M/s Vishal Traders instead of 25%,of the total bogus purchases made by the CIT(A) and Tribunal. 14. On perusal of the of the order passed by this Court in Tax Appeal No. 840 and 844 of 2013, it appears that the facts of the case of Gujarat Ambuja Export Ltd. stand on different footing, as it was found by the CIT(A) as well as the Tribunal that the GP rate and net profit rate of the year under consideration were better than previous year. The stock register was properly maintained and the purchase in question was reflected in ....
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.... to remand the matter back to the Tribunal so as to give finding of fact in order to ascertain whether the decision of this Court in Tax Appeal No.840 of 2013 would be applicable so as to restrict the addition to 5% of the total bogus purchase made by the assessee from M/s Vishal Traders. The Co-ordinate Bench of this Court has referred the assessment order, wherein it is observed that the assessee did not give any explanation in respect of the bogus purchases and also taking note of the fact that during the course of appellate proceedings the remand report was called for from the Assessing Officer in that regard and after considering the remand report, the CIT(A) found as a matter of fact the purchases shown from Vishal Traders were not actual purchase but only bills had been obtained and the cheques issued to M/s Vishal Traders were only an eye wash, the cash was returned back to the assessee. The assessee in the present case has not placed on record either before Assessing Officer or before CIT(A) with regard to its GP rate or maintenance of the stock register or to show that the prices shown in the bills of the Vishal Traders where the current prevailing price of the goods, whi....