TaxTMI 
TaxTMI 
2022 (5) TMI 294
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....021 2. The Revenue as well as assessee have filed the above mentioned appeal as well as cross-objection against the order dated 08.09.2020 passed by the Commissioner of Income Tax (Appeals)-02, relevant to the A.Y.2010-11. 3. The revenue has raised the following grounds: - "1. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has erred in not appreciating the fact that the assessee could not establish the genuineness of the purchases from the non-existent vendors as per information received from Law enforcement agency of State Govt. of Maharashtra i.e. Sales Tax Department, and established by the Assessing Officer. 2. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has erred ....
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....d the following cross objection: - "1) Ld. CIT (A) ignored the fact as well as of Law that proceeding under section 147 of Income Tax Act, 1961 initiated by the Assessing Officer is itself bad in Law void ab initio and illegal and liable to quash for the Assessment Year 2010-11. 2) Ld. CIT(A) erred of law as well as of fact that the re-opening of the assessment cannot be done solely on the basis of the information received from the sales tax department without providing documentary evidence and cross examination of the so called hawala dealers to the appellant. 3) Ld. CIT (A) ignored the submissions of Appellant and also ignored Hon'ble Supreme Court and Jurisdictional High Courts Judicial Pronouncements (part of the appellant submis....
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.... as of law by restricting the estimated addition on so called bogus purchases to the extent of 25% without appreciating the fact that the gross profit of the appellant is around 4% only. Comparison of Gross Profit Ratio: - Particulars / Assessment Year 10-11 11-12 12-13 Sales 2,04,25,888 7,39,59,250 5,84,16,024 Purchases 2,01,18,559 6,52,87,706 4,98,45,522 Gross Profit 8,59,330 17,46,817 14,68,030 Net Profit 4,836,353 10,90,538 10,02,360 % of G.P. to Sales 4.21% 2.36% 2.51% 8) The Order of Ld. CIT (A) was against the Principle of Natural Justice and hence liable to quash. 9) The order appeal against is bad in Law and against the principle of natural justices and tax jurisprudence. 10) The order appeal apainst....
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....iled the present appeal before us and the assessee filed the cross-objection before us to the delete the addition. 6. The matter of controversy in the appeal as well as cross-objection is that what should be the addition on account of bogus purchase. The contention of the Ld. Representative of the Department is that there should be 100% addition of the bogus purchase. However, on the other hand, the Ld. Representative of the assessee has refuted the said contention and argued that the case of the assessee's father has been disposed off by the Hon'ble ITAT bearing ITA. No.2016/Mum/2020 dated 25.02.2022 in which the Hon'ble ITAT has restricted the addition to the extent of 5% of the bogus purchase, therefore, the claim of the assessee is lia....
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....ype of cases entire addition or the addition @ 25% as has been done by the Ld. CIT(A) is not sustainable because sales in this case have not been disputed by the Revenue Authorities and in these circumstances addition of the gross profit on average basis in the range of 5% to 12.5% can be made and relied upon the decision rendered by the Hon'ble Bombay High Court in the case cited as Pr. CIT vs. JK Surface Coatings Pvt. Ltd. in ITA No.1850 of 2017 order dated 28 October, 2021 and the decision rendered by the co-ordinate Bench of the Tribunal cited as M/s. Pavapuri Metals & Tubes vs. Income Tax Officer in ITA No.1148/M/2019 order dated 29.09.2020 and in the case of Ravindranathan Nair vs. Income Tax Officer in ITA No.2662/M/2018 order dated ....
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....dded in the bogus purchase when material consumption factor do not show abnormal deviation. 5. Whether the purchases were bogus or whether the parties from whom such purchases were allegedly made were bogus was essentially a question of fact. When the Tribunal has concluded that the assessee did make the purchase, as a natural corollary not the entire amount covered by such purchase but the profit element embedded therein would be subject to tax." 9. The Ld. A.R. for the assessee further contended that in this case the assessee has never earned the gross profit @ 25% as estimated by the Ld. CIT(A) and brought on record its gross profit earned and accepted by the Revenue in the earlier years as under: 10. In view of what has been discus....