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TaxTMI 
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TaxTMI 
2024 (8) TMI 564
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.... in law, the Hon'ble ITAT was justified in relying upon the decision of the Hon'ble Bombay High Court in the case of CIT v/s. Hariram Bhambhani (ITXA No.313 of 2013), when the issue of addition u/s.69C as to the Bogus Sales was not involved in the present case?" 3. The assessment years in question are assessment years 2009-2010 and 2010-2011. Briefly, the facts are the assessee is stated to be engaged in the business of trading in resins and chemicals on wholesale basis. On information received from the DGIT (Investigation), Mumbai the Assessing Officer (AO) invoked Section 147 of the Income Tax Act, 1961 (for short "the Act") to reopen the completed assessment by issuing notice under Section 148 dated 12 March 2013. In response thereto the assessee filed a revised return on 20 March 2013, as also sought the reasons as recorded by the A.O. The A.O. was of the opinion that the assessee had made purchases amounting to Rs. 1,34,25,500/- from six parties who were declared by the Sales Tax Department as ingenuine dealers. It is not in dispute that during the assessment proceedings, the assessee filed ledger accounts, conformation of suppliers, purchase bills, delivery bank statements ....
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....ich it was observed that the CIT (A) has rightly estimated the profit in regard to the purchases at 12.5%, however, the Tribunal observed that CIT (A) was not correct in reducing the gross profit already returned by the assessee at 4.74% out of the 12%, for the reason that the gross profit returned by the assessee related to the sales made by the assessee and did not have link to the purchases for which assessee might have procured bills by making savings in VAT etc. For such reason the tribunal partly allowed the grounds as raised by the revenue and directed the AO to estimate the income at 12.5% in each of the assessment year, on the purchases so made. The Tribunal rejected the assessee's challenge to the orders passed by the CIT (A) while partly allowing the revenue's appeals and dismissing the assessee's appeal. 8. Mr. Suresh Kumar, learned counsel for the appellant/revenue has limited submissions in assailing the impugned order. It is his primary submission that the approach of the CIT (A) as also the part acceptance of such approach by the tribunal in the impugned order needs interference of this Court on the question of law as raised by the revenue. It is submitted that ent....
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.... the basic premise on the part of the A.O. so as to form an opinion that the disputed purchases were not having nexus with the corresponding sales, appears to be not correct. It is seen that what was available with the department was merely information received by it in pursuance of notices issued under Section 133 (6) of the Act, as responded by some of the suppliers. However, an unimpeachable situation that such suppliers could be labeled to be not genuine qua the assessee or qua the transaction entered with the assessee by such suppliers, was not available on the record of the assessment proceedings. It is an admitted position that during the assessment proceedings, the assessee filed all necessary documents in support of the returns on which the ledger accounts were prepared, including confirmation of the supplies by the suppliers, purchase bills, delivery bank statements etc. to justify the genuineness of the purchases, however, such documents were doubted by the AO on the basis of general information received by the AO from the Sales Tax Department. In our opinion, to wholly reject these documents merely on a general information received from the Sales Tax Department, would n....
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....rchase / sales transactions being bogus merely on the basis of general information so as to discard such expenditure and add the same to the assessee's income. 14. Any half hearted approach on the part of the AO to make additions on the issue of bogus purchases would not be conducive. It also cannot be on the basis of superficial inquiry being conducted in a manner not known to law in its attempt to weed out any evasion of tax on bogus transactions. The bogus transactions are in the nature of a camouflage and/or a dishonest attempt on the part of the assessee to avoid tax, resulting in addition to the assessee's income. It is for such reason, the approach of the AO is required to be well considered approach and in making such additions, he is expected to adhere to the lawful norms and well settled principles. After such scrutiny, the transactions are found to be bogus as the law would understand, in that event, they are required to be discarded by making an appropriate permissible addition. 15. Be that as it may, the orders passed by the CIT (A) in the present case are partly interfered in favour of the revenue as discussed by us hereinabove. In doing so the tribunal has observed....