TaxTMI 
TaxTMI 
2024 (11) TMI 913
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....etition explaining reasons thereof. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the Cross Objection for hearing. 2.1. For the sake of convenience, both the appeals of assessee and Revenue and the Cross Objection filed by the assessee were heard together and are being disposed of by this common order. 2.2 The Revenue has raised the following grounds : "1. Whether on the facts and circumstances of the case, the Id. CIT(A) is correct in deleting the addition by ignoring the fact that the assessee company could not prove that the goods were actually supplied by the two parties i.e., Sri Jawahar Lal Shah & Daya Nand Maruti Phalke. 2 Whether on the facts and circumstances of the case, Id. CIT(A) is correct in deleting the addition by ignoring the fact that the assessee company could not prove that the purchases so made from the above two parties were shown in the sales. 3. Facts of the case, in brief, are that assessee is a company, filed its return of income for AY 2021-22, declaring an income of Rs. 1,60,49,706/-. The case was selected for scrutiny through CASS an....
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....et. The appellant has not placed any evidence on record that the goods were purchased from these two parties at arms' length price. The appellant has also not placed on record any comparable bills/invoices for purchases of similar items made from other party to establish that the purchases from these two parties in question were at par with the purchases made from other parties during the period under consideration. The possibility of such purchases from unregistered dealers without invoices cannot be ruled out. In view of the above, the correctness of the purchase prices mentioned on such bills/invoices issued by these two parties cannot be accepted and some additional profit needs to be estimated on such purchases made from the abovementioned party. 4.2.8 Keeping in view the totality of the case, the AO's action of addition on account of bogus purchases cannot be sustained because the AO has not substantiated his claim that how the sales of same quantities were made without having purchases of these items. Further, I am of the considered opinion that keeping in view the medicinal items, an additional profit [email protected]% of purchases from these two parties should be taxe....
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....ssment order, it is seen that the AO didn't record his any finding about levy of tax u/s 115BBE of the Act. Hence, this ground doesn't arise from the assessment order. Thus, this ground of appeal is dismissed. 5. In result, the appeal of the appellant is partly allowed." 5. Feeling aggrieved with the order of ld.CIT(A), Revenue as well as the assessee are now in appeal before us. 6. Before us, ld.DR submitted that the ld.CIT(A) granted part relief to the assessee ignoring the fact that assessee company could not prove that goods were actually supplied by the two parties i.e., Shri Jawahar Lal Shah and Shri Daya Nand Maruti Phalke. Furthermore, ld.DR relied upon the decision in the case of Shri Ganesh Rice Mills Vs. CIT of Allahabad High Court reported in (2007) 294 ITR 316, wherein the assessee failed to establish the purchases in question which have been made from the non-existent firms. In the said case, Tribunal has upheld the finding of Assessing Officer that in order to lower profits, bogus purchases had been introduced and held that addition on account of disallowance of such purchases was justified. Ld.DR further submitted that Assessing Officer after finding ....
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....red the case laws, mentioned in the order of ld.CIT(A) and prayed to delete the additions made by the Assessing Officer. The ld.AR also submitted that its purchases are bonafide and material from such impugned purchases was received and the same after some process was also sold and such sales were declared in its accounts and I.T.R filed declaring sales including sales relating to bogus purchases have been accepted by the Revenue since the sales are not doubted. The ld.AR also submitted that during all these years, the GST made by the above suppliers was accepted by the GST authorities. Therefore, it is incorrect to brand the genuine purchases as sham transactions and treating them as bogus purchases especially when the assessee has proved beyond doubt regarding the receipt of such material and sale of such material and the payments were made through banking channels. 9. The ld.AR further submitted that if purchases are to be treated as bogus then the corresponding sales also are to be treated as bogus and only the margin i.e. difference in purchase and sales has to be brought to tax as additions and not the entire purchases. He also submitted that the fact of acceptance of sale....
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....otices u/s 133(6) of the Act were issued to Passhupati Steels India and Rudra Impex but there was no compliance made by these parties. Further physical verification of offices of the above parties were also done and it was found that no such entities are operating from the addresses mentioned. Similarly, in the case of the above parties, the GST Registration was cancelled w.e.f. 24.03.2021 in case of Rudra Impex, the GSTIN of Rico Impex was cancelled w.e.f. 7.6.2019, in case of Passhupati Steel India was cancelled w.e.f. 16.04.2019 and GSTIN of Triveni Steel India was cancelled w.e.f. 28.10.2021. Further, the Assessing Officer noted that three of the purchase parties namely Rudhra Impex, Triveni Steels India & Rico Impex used the same transporter i.e. Shree Siddhi Vinayak Logistics to transport goods and all the four parties used same weighing scale situated at Thane in the name and style of Krishna Computerized Weight Bridge. 17.1 We find the learned CIT (A) NFAC deleted the addition made by the Assessing Officer but directed the Assessing Officer to apply the rate of profit on other genuine purchases, the reasonings of which have already been reproduced in the preceding ....
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....ee. In essence, the Tribunal estimated the possible profit out of purchases made through non-genuine only parties. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick could be adopted". Xxxx Xxx Xxx 22.2 Therefore, under the circumstances, the Hon'ble High Court had reversed the decision of the Tribunal and directed the Assessing Officer to add the entire bogus purchases. However, in the instant case, no such blank signed cheques and vouchers of the 4 alleged concerns were found nor there was any endorsement on the back of the cheque. Similarly, no blank bill books, letter heads and vouchers of these concerns were found and seized from the premises of the assessee. Therefore, the said decision is not applicable to the facts of the present case. In any case after the decision of the N.K. Industries Ltd (Supra), decision of various other High Courts have come in which case it has been held that only the profit element embedded in such bogus purchases can be added and not the entire purchases can be added especially when the sales have not been disputed. It has been held in various d....