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2023 (1) TMI 478
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....2,50,25,283/- to Rs.62,56,320/- (25% of Rs.2,50,25,283/-). 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the assessee could not prove the genuineness of the purchase transactions during the assessment proceedings. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the disallowance of bogus purchase at 25% of total purchases instead of 100 % disallowance when the total purchase made by the assessee through Bhanwerlal Group was proved as bogus purchases. The Ld. CIT(A) has also not considered the decision of Hon'ble Apex Court in the case of M/s N. K. Proteins Ltd Vs DCIT which is squarely applicable In this case. 4. On the facts and In the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that the Order of the Assessing officer may be restored. 3. Grounds of appeal raised by the Assessee (in ITA No.21/SRT/2022) are as follows: "1. On the facts and circumstances of the case as....
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....50,25,203/- has escaped the assessment for A.Y.2012-13. With prior permission from Pr.CIT-2, Surat vides his letter no. SRT/Pr.CIT/HQ/147/ward 2(3)(7)/2018-19 dated 28/03/2019, notice u/s.148 of the IT., Act was issued on 29/03/2019 and duly issued on the assessee. In response to the notice, assessee filled return of income on 29.04.2019 of Rs 20,13,260/-. Reason for reopening was provided to the assessee. The following notices were issued upon the assessee through his registered email: Sr. No. Notices u/s Date of issue Date of hearing Remarks 1 Notice U/s. 148 of the IT. Act. 29.03.2019 Within 30 days Duly served through regd. email address in response return filled on 19.08.2019 3 Notice U/s 142[1] of IT. Act 06.08.2019 & 24.08.2019 13.08.2019 & 29.08.2019 Reply on 29.08.2019 Notice U/s 143[2] of IT. Act 29.10.2019 01.11.2019 compliance 4 Show Cause Notice u/s 144 of the IT. Act. 29.11.2019 04.12.2019 compliance During the year under consideration the assessee have taken accommodation entry to the tune of 2,50,25,283/-. During the course of assessment proceedings the assessee has filed ledgers of....
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....ent of the assessee cannot be taken into believe since in various case laws it has been held that "mere payment by account payee cheque is not sacrosanct nor can it make & non-genuine transaction genuine [Precision Finance Pvt. Ltd. vs. CIT - 208 ITR 465 (Cal.)]". 9. The assessing officer noted that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence. In this context, reference is invited to the ratio laid down in Section 106 of the Indian Evidence Act whereby the onus of proving the correctness of the entry, the truth of which is called in question by Assessing Officer shifts on to the assessee. If the assessee fails to discharge this onus, the AO is left free to draw his own interference from the inability of the assessee to explain what was within his knowledge and from the other circumstances of the case. Here, it is also pertinent to mention that proceedings under the Income-tax Act are not judicial proceedings in the sense in which the phrase "judicial proceedings" is ordinarily reduced. Therefore, the AO is not feted or bound by technical rules about the evidence as contained in the Indian Evidence Act. The assess....
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....essee, observing as follows: ".......It is well known that if purchases are made from open market without insisting for the genuine bills, the suppliers may be willing to sell those products at a much lower rate as compared to the rate which they may charge in case the dealer has to give a genuine sale invoice in respect of that sale and supply the goods. There may be various factors due to which there is bound to be a substantial difference between the purchase price of unaccounted material and rate of purchase of accounted for goods. There may be a saving on account of sales-tax and other taxes and duties which may be leviable in respect of manufacture or sale of goods in question. The suppliers or the manufacturers make a substantial saving in the income-tax in respect of income from sale of unaccounted goods produced and sold by them. This may also be one of the factors due to which the seller may be willing to charge lower rates for unaccounted goods as compared to accounted for goods. Keeping all these factors in mind, the Hon'ble ITAT Ahmedabad in the case of Vijay Proteins Ltd. Vs. ACIT (supra) held that 25% of the purchase price accounted for in the books of a....
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....e peculiar facts and circumstances of each case. In the present case, for reasons recorded herein above, the provisions of Section 40A(3) would not be applicable and even if they are held to be applicable, the expenditure would be covered by the exceptions provided in Rule 6DD(j) of the Rules. 16. It is a matter of fact that the goods were not received from the parties from whom it is shown to have been purchased but, such material was received from a different source which is exclusively within the knowledge of the assessee and none else. Therefore, it is evident that the assessee had inflated the expenditure in question by showing higher amount of purchase price through the fictitious invoices in the names of 33 bogus suppliers. Considering the overall factual scenario, the Tribunal was justified in disallowing 25% of the purchase price." 5.10. In the light of above discussion, it is concluded that the appellant did not purchase the goods from the aforesaid parties. At the same time, he did purchase the goods from some other persons (may be agents or persons well known to the appellant). However, the AO's action of adding the total purchase value cannot be s....
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....essing Officer and prays the Bench that addition should be made at the rate of 100% of bogus purchases. 15. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that the issue raised in the Revenue's appeal and assessee's cross appeal, is squarely covered by the judgment of co-ordinate Bench in the case of Pankaj K. Chaudhary, in ITA No.1152/Ahd/2017, dated 27.09.2021, wherein it was held that addition @ 6% of bogus purchases are quite reasonable. The findings of the co-ordinate Bench are as follows: "12. We have heard the submission of ld.CIT-DR for the Revenue and the ld. Authorised Representative (AR) of the assessee. We have also gone through the various documentary evidences furnished by assessee. The ld. CIT-DR for the Revenue supported the order of AO. The ld. CIT-DR submits that Investigation Wing, Mumbai made a search on Bhanwarlal Jain Group. During the search and after search, the Investigation Wing made a thorough inve....
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.... submits during the assessment, the AO has not made any independent investigation. The AO reopened the case of the assessee on the basis of third party information without making any preliminary investigation. The AO received vague information about providing accommodation entry by Bhanwarlal Jain Group. No specific information about the accommodation entry obtained by assessee was received by AO. There is no live link between the reasons recorded qua the assessee. Therefore, the re-opening is invalid and all subsequent action is liable to be set aside. 15. On account of additions of bogus purchases, the ld.AR submits that in the original assessment, the assessee filed its complete details of purchases to prove the genuineness of expenses. The AO accepted the same in the assessment order passed under section 143(3) on 10.03.2009. During re-assessment, the assessee again furnished complete details about the genuineness of purchases. The assessee filed confirmation purchases invoices, accounts of the parties, bank statement of assessee showing transaction to the banking channel. The AO has not made any comment on the documentary evidence furnished by assessee. The AO solely ....
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....e on the facts of the present case. 17. We have considered the submissions of the parties and have gone through the order of the lower authorities. We have also deliberated on each and every case laws relied by both the parties. We have also examined the financial statement of all the assessee(s) consisting of computation of income and audit report. We have also gone through the documentary evidences furnished in all cases. Ground No.1 in assessee's appeal relates to the validity of reopening. The ld AR for the assessee vehemently argued that the AO reopened the case of the assessee on the basis of third party information, and without making any preliminary investigation, which was vague about the alleged accommodation entry by Bhanwarlal Jain Group. And that there was no specific information about the accommodation entry availed by the assessee. There is no live link between the reasons recorded qua the assessee. We find that the assessee has raised objection against the validity of the reopening before the AO. The objections of the assessee was duly disposed by AO in his order dated 09.02.2015. The assessee raised ground of appeal before ld CIT(A) while assailing the ord....
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.... of disputed purchases solely relied on the report of the investigation wing Mumbai. No independent investigation was carried by the AO. The AO has not disputed the sale of the assessee. The AO made no comment on the evidences furnished by the assessee. We further find that ld CIT(A), while considering the submissions of the assessee accepted the lapses on the part of the AO and noted that no sale is possible in absence of purchases. The Books of the assessee was not rejected by the AO. The ld CIT(A) on further examination of the facts and various legal submissions find that Ahmedabad Tribunal in Bholanath Poly Fab Private Limited (supra) held that in the such cases the addition of bogus purchases was sustained to the extent of 12%, on the observation that the assessee may have made purchases from elsewhere and obtained the bills from impugned supplier to inflate Gross Profit Rate. The ld CIT(A) by considering the overall facts, concluded that the 100% disallowance of purchase is not justified. We also find that the ld.CIT(A) also considered the decision of jurisdictional High Court in Mayank Diamonds Pvt. Ltd. (supra) and compared the fact of the present case with the facts in May....