TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 90
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....granted by the CIT(A) for the above mentioned assessee for A.Y. 2010-11 are as under:- "1. "Whether the CIT(A) has erred in law in law and on facts of the case in deleting the additions of Rs.51,78,64,090/- made by the AO on account of bogus purchase made under section 68 of the Act ?" "2. Whether the CIT(A) erred in law and on facts in not following the decision of the Hobble Gujarat High Court in the case of N.K, Industries Ltd. vs. DC1T [2016] 72 taxmann.com 289 (Gujarat) (which was confirmed by the Hon'ble Supreme Court in its order Special Leave to Appeal(C).. CC No, 769 of 2017 dated 16.1.2017 wherein it was held that addition on basis of undisclosed income could not be restricted to certain percentage when the entire transaction was found as bogus"). "3. The appellant craves leave to amend alter any ground or add a new ground which may be 3. The only interconnected issue raised by the revenue is that the learned CIT-A erred in deleting the addition made by the AO for Rs. 51,78,64,090/- under the provisions of section 68 of the Act and furthermore failed to apply the principles laid down by the Hon'ble jurisdictional High Court in the case of NK Industries for d....
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....e the assessee itself has admitted that the transactions in question are ingenuine (ii) The provisions of section 145 read with section 2(12A) supposes that the assessee's books of account must include the day-to-day registers for sale, purchase and stocks and stocks in books as the assessee is the trader. Undoubtedly, such registers are necessary to be maintained by the assessee for arriving at the correct profits figures. In the present case, admittedly, the assessee has not produced any of such records. On the contrary the assssee itself has admitted that its books of account are not reliable as the purchases and sales are bogus. Therefore the compliance of the assessee with accounting standard laid down by ICAI is out of question. Thus invoking the provisions of sec.. 145(3) of the Act to determined the correct income of the assessee company. (iii) The contention of the assessee not to add the same as unexplained cash credit is not acceptable In the present case, as per the admission of the assessee the entire purchases of Rs 51,93,23,847/- is bogus and bogus invoices had been raised against these purchases The entire purchases have been debited in the P& L Account an....
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.... Industries Ltd. and there too it was established that ihe company was engaged only in the billing activities. On perusal of bank account of appellant, it is evident that whatever fund has been received on the name of sale to M/s. KGN Enterprises has been transferred to M/s. Biotor Industries Ltd. on the name of purchase immediately. The appellant has submitted that the AO has made the addition of purchases shown from M/s. Biotor Industries Ltd. u/s. 68 which is not tenable on the facts and law. The appellant has shown purchase of Rs.51,93,23,847/- and shown a sale of Rs.52,01,48,035/-. The purchase and sale has been shown on the same day with slight margin with a profit of Rs.8,24,188/-. Appellant without prejudice has contended that at the best, if addition is to be made, it should be for the commission on accommodation entry @ 0.2% of the sale amount. 3.5. It is seen from the copy of purchase account, sales account and the copy of bank accounts that appellant has shown purchase from M/s. Biotor Industries Ltd. and shown sale to M/s. KGN Enterprises on the same day. In the bank account also the sale receipt from M/s. KGN Enterprises has been transferred to M/s. Biotar Industri....
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....Vs. Birla Gwalior Pvt. Ltd. [89 ITR 266] and C1T, Bombay City 1 Vs. Shoor]i Vallabhdas & Co. in 46 ITR 144 has laid down that if is the real income which is taxable under the Income Tax Act. in view of the above, only real income as reflected in the books of account and. bank statement is to be taxed. Accordingly, The disallowance of bogus purchases of Rs.51,93,23,847/- made u/s. 68 of the Act is not sustainable. 3.7. The appellant in the process of being middle man has only earned income of Rs.9,24,188/- being difference of sale and purchase. The appellant in the return of income has shown loss of Rs.1 ,25,878/- by claiming operating and general expenses of Rs.10,59,757/-. As the appellant has not done any real business, the above expenses are not allowable. In view of the above, the addition made by AO to the extent of Rs.14,59,757/- is being confirmed. The ground of appeal is accordingly partly allowed. 9. Being aggrieved by the order of the learned CIT-A, the revenue is in appeal before us. 10. The learned DR before us repeated the findings of the AO contained in the assessment order and the grounds of appeal raised by the Revenue. 11. On the contrary, the learned AR bef....
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....ition here. It has been the consistent stand of the assessee which has been accepted by the First Appellate Authority and affirmed by the Tribunal that the business of the assessee centered around customers/beneficiaries making deposits in cash amounts and in lieu thereof taking cheques from the assessee for amounts slightly lesser than the quantum of deposits, the difference representing the commission realized by the assessee. The cash amounts deposited by the customers i.e., the beneficiaries had been accounted for in the assessment orders of these beneficiaries. Therefore, question of adding such cash credits to the income of the assessee, more so when the assessee was only concerned with the commission earned on providing accommodation entries does not arise. 12.2 It is also important to note that the assessee being engaged in the circular transactions/ one of conduit in accommodation entries can be made subject to tax based on real income theory. It is for the reason that the assessee was not the beneficiary of the amount received by it on the sales made to the KGN Industries Ltd. As such the amount of sales received by the assessee was utilized against the purchases from M....
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....assessee being NK Indusries Ltd was not engaged in circular transaction by way of providing accommodation entries for commission. In that case, the assessee was one of the beneficiary of the accommodations entries which were provided by the other parties whereas in the case on hand the assessee is middleman and engaged in the circular transaction. Thus, in our humble understanding we are of the view that the principles laid down by the Hon'ble Gujarat High Court in the case of NK Industries (supra) cannot be applied in the given facts and circumstances. 12.6 In view of the above and after considering the facts in totality, we do not find any reason to interfere in the finding of the learned CIT-A. At the time of hearing the ld. DR has not brought anything on record contrary to the finding of the ld. CIT-A. Accordingly, we uphold the same and direct the AO to delete the addition made by him. Hence, the ground of appeal of the revenue is hereby dismissed. 12.7 In the result, the appeal filed by the revenue is dismissed. Coming to ITA No. 2464/Ahd/2018, an appeal by Revenue in the case of KFC Exports Pvt. Ltd. 13. The revenue has raised following grounds of appeal: 1. Whether t....