TaxTMI 
TaxTMI 
2022 (2) TMI 43
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the addition on account of bogus purchases. Therefore, with the consent of the parties all the appeals are clubbed together, heard and are decided by consolidated order to avoid the conflicting decision. For appreciation of fact, facts in appeal for AY 2008-09 is treated as 'lead' case. The Revenue in its appeal in ITA No.284/SRT/2019 has raised the following grounds of appeal:- "(i) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in restricted the addition made by the AO of Rs. 3,40,03,788/- on account of bogus purchases to 5%. (ii) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider. (iii) On the facts and circumstances of the case and in Law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld. CIT(A)-1 Surat may be set-aside and that of the Assessing Officer's order may be restored." 2. Brief facts....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id parties should not be added to the income of assessee. The assessee filed its reply dated 18.03.2016. In the reply, the assessee stated that the entire sales and purchases of assessee are genuine and can be verified with the documentary evidence in the form of stock register and that payment was made through account payee cheques. The assessee also relied on certain case law. The reply of assessee was not accepted by the Assessing Officer. The Assessing Officer on the basis of report of Investigation Wing about the search & seizure made at the 'PK Jain' group and the statement recorded therein held that there was a clinching evidence collected by Investigation agency that the assessee is beneficiary of the accommodation entry. Thus, the contention of assessee is that they are maintaining all records are not acceptable, the books of account maintains by assessee cannot be regarded as full and complete. The Assessing Officer rejected the books of account of assessee by holding that information received from the investigation wing that all the concerns from whom the assessee has shown purchases are managed by PK Jain are not genuine. The Assessing Officer made addition of 100% purc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jected the books of account. The claim of assessee that payments were made through account payee cheques is not sufficient to prove the genuineness of the purchases. The Assessing Officer made 100% of disallowance, however, the Ld. CIT(A) restricted it to @5% of the impugned/ bogus purchase shown from P K Jain. The Ld. CIT-DR for the Revenue submits that the entire purchases from P.K. Jain group is bogus and the 100% of such disputed purchases may be upheld. In the alternative submissions the Ld. CIT-DR for the revenue submits that the disallowance restricted by Ld. CIT(A) @ 5% of bogus purchases is on the lower side and it should be restricted to 25% the aggregate of such disputed/ bogus purchases. 6. On the other hand, Ld. AR of the assessee submits that all the purchases shown by the assessee are genuine. The assessee is maintaining complete records of sales and purchases. The assessee furnished complete details of stock and sale. The Assessing Officer has not given any finding on the evidences furnished by assessee. The assessee furnished the details of evidence consisting of their addresses, PAN, CIN master data, certificate of incorporation, confirmation of account of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... statement of the supplier 4. Kunal Gems • PAN Card • Ledger account • Confirmation of account • Purchase bills • Own bank statement • IT acknowledgement receipt • Bank statement of the supplier 5. Mohit International • PAN card • Ledger account • Confirmation of account • Purchase bills • Own bank statement • IT acknowledgement receipt • Bank statement of the supplier 6. Sumukh Commercial Pvt. Ltd. • PAN card • AO details • CIN Master Data • Leger account • Confirmation of account • Purchase bills • Own bank statement • IT acknowledgement receipt 7. Corresponding sale bills 8. Purchase register 9. Sales register 10. Quantity tally 11. Stock register 12. IT acknowledgement receipt and audited balance sheet 13. Submission filed before Ld. AO 14.Submission filed before Ld. CIT(A) 10. To support his lega....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied out by the AO. No specific findings were given on the documentary evidences filed by the assessee. The sale of the assessee was not disputed by the AO. As recorded above the ld CIT(A) restricted the disallowances to the extent of 5% of the disputed purchase on the basis of theory evolved in various decision that disallowance may be restricted to the extent of profit embedded in such purchases. It is also a matter of fact that such purchases are shown to inflate the expenses and to reduce the profit. The AO made addition of 100% of the disputed/ impugned purchase. In our view, the AO is not justified in disallowing the 100% of purchases in absence of proper investigation of such purchases. No doubt the disallowance made by the ld CIT(A) is also on estimated basis. On verification of facts, we find that the assessee has shown total turnover of Rs. 186.96 Crore. The assessee while filing return of income has shown income of Rs. 6,10,770/-. The assessee has shown net profit @ 0.0051%, which is extremely on lower side. The submission of Ld. AR of the assessee on the basis of report of task force constituted by Department of Commerce, Ministry of Commerce & Industry, wherein the indu....