2024 (5) TMI 147

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.... 250 of the Income-tax Act, 1961 (in short, 'the Act') for Assessment Year 2008-09 in the case of Shri Rameshkumar Sanghvi dated 21/09/2023 and 2009-10 in the case of Shri Kalpesh Rameshbhai Vyas dated 03/11/2023. The impugned orders were emanated from the order of the Ld. Income-tax Officer-19(3)(1), Mumbai order passed under section 143(3) read with section 147, date of order 30/03/2015 in the case of Shri Rameshkumar Sanghvi and Ld. Income-tax Officer-2(1), Thane, order passed under section 143(3) read with section 147, date of order 02/12/2016 in the case of Shri Kalpesh Rameshbhai Vyas. 2. In the outset both the appeals have same nature of fact and have a common issue. For brevity both the appeals are taken together during adjudi....

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....n and evidences in their proper perspective, without providing copies of material relied upon and without providing cross examination, is liable to be annulled. On the facts and in the circumstances of the case and in law the assessment made under section 143(3) rws 147 of the Act and issuance of notice under section 148 of the Act is without jurisdiction in as much as the learned Assessing Officer failed to record his satisfaction that there is failure on the part of the appellant to disclose fully and truly all material facts necessary for the assessment. The learned Commissioner of Income Tax erred in confirming charging of interest under section 234A. 234B and 234C and 234D of the Act." 4. The brief fact of the case....

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....nuine Purchases Alleged bogus Purchases Sales 1,64,03,561 90,99,865 Closing Stock 89,376   (A) 1,64,92,937 90,99,865 Opening Stock 4,54,236   Purchases 1,51,60,896 88,17,762 (B) 1,56,15,132 88,17,762 GP (a-b) 8,77,805 2,82,103 Gp Ratio 5.667% 3.101%   G.P. of genuine purchases 5.66% Less : G.P. of Bogus purchases 3.10% Addition to be confirmed 2.56%" Ld.AR placed that the bogus purchases of Rs. 88,17,762/- is already declared by the assessee in books of account. The gross profit was declared @3.10%. The gross profit of the genuine purchases was 5.66%. So, the Ld.AR prayed for restricting the addition of balance GP i.e. ....

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....so did not produce the parties. However as held by the honourable Bombay High Court in case of Mohmd. Hail Adam & company (supra) where sales are not disputed; no discrepancy between purchases shown by the assessee and the sales declared; only the addition should be restricted to the extent of bringing the gross profit on purchases at the same rate of other genuine purchases, On this mandate, it was found that assessee has given the quantitative sales corresponding to the quantitative purchase, which is from alleged bogus suppliers. The resultant gross profit from alleged bogus purchase and sales is 5.096%, The gross profit ratio without alleged bogus purchase and corresponding sales is 5.407%, which will result into addition of 0,3% of all....

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....te on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of v JW.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- "So far as the question regarding addition of Rs. 3,70,78,1257- as gross profit on sales of Rs. 37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is ....

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....s purchase is @3.10%. So, the balance@ 2.56% of bogus purchases is only to be added and is restricted for addition. In our considered view, we set aside the appeal order and the addition is restricted to gross profit @2.56% on the bogus purchase. 9. Accordingly, the appeal of the assessee is allowed on the terms indicated above. ITA 4214/Mum/2023 10. Related to this appeal the ld. AR submitted the calculation, reproduced as below. The ld. AR prayed for restricting GPR @2.86% on bogus purchase. " Alleged party for Addition Kotsons Impex Pvt Ltd 3126989 Dhruv Sales Corporation 13052752 Deep Enterprises 1316222 Trimurti Enterprises 7727937 Atlas Enterprises 4223606 Shree Sai Trading and Co ....