TaxTMI 
TaxTMI 
2025 (2) TMI 448
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....0.11.2017 for A.Y. 2015-16. As the facts and issues involved in the captioned appeals are more or less inextricably interlinked and in fact interwoven, therefore, the same are being taken up and disposed off by way of a consolidated order. 2. We shall first take up the cross-appeals filed by the assessee and the revenue in ITA No.122/RPR/2024 & ITA No.135/RPR/2024 for assessment year 2013-14, wherein the assessee has assailed the impugned order on the following grounds of appeal before us: "1. On the facts and circumstances of the case and in law, reopening u/s. 148/147 is invalid; it is merely on change of opinion as based on findings of survey conducted upon assessee u/s. 133A on 15-3-16 which had been considered in original assessment made u/s. 143(3) dt.31-3-16 and addition had also been made on such count; reopening of concluded assessment made u/s. 143(3) dt.31-3-16 in absence of any fresh/new material, be treated merely on change of opinion on the same material facts, is not permissible in the eyes of law, is liable to be quashed; relied on Siemens Energy Industrial Turbo India (P) Ltd (2024) (Bom HC); Mira Bhavin Mehta (2024) (Bom HC); Godrej Projects Developmen....
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....on made merely on presumption & surmises without bringing any material/ evidence on record; addition is unjustified and is liable to be deleted. 6. On the facts & circumstances of the case and in law, ld. CIT(A) has erred in sustaining addition of Rs. 5,99,982 on the count of mistake in the original assessment made u/s. 143(3) dt.31-3-16 as in such assessment, expenses of Rs. 26,70,479 was disallowed while addition was made mistakenly of Rs. 20,70,497; it is a factual mistake which is liable to be deleted. 7. The appellant craves leave to add, urge, alter, modify or withdraw any grounds before or at the time of hearing." On the other hand, the revenue has assailed the impugned order on the following grounds of appeal before us: "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,38,25,061/- out of total addition of Rs. 3,60,33,063/-, ignoring his own finding in his order that "there is no doubt regarding bogus purchases of Rs. 14,41,32,250/- had been made by the assessee" whereby he has upheld the basic finding of AO in entirety? 2. Whether on the facts and circumsta....
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....otech, Raipur 2,37,55,000/- 5,35,000/- 28.11.2012 3. M/s. Eaden Rice Mill, Raipur 2,69,10,000/- 4,65,000/- 01.09.2012 4. M/s. Sakshi Gopal Corporation, Raipur 22,12,500/- 3,68,750/- 10.12.2012 5. M/s. Shiv Shankar Chawal Udyog, Raipur 37,70,000/- 4,71,250/- 11.12.2012 6. M/s. Hardha Agency 77,60,000/- 5,35,000/- 27.11.2012 Total 14,41,32,250/- 6. The A.O observed that a survey operation u/s. 133A of the Act was conducted at the business premises of Shri Sanjay Sharma, Hanuman market, Raipur and the assessee, viz. Shri Kamlesh Kesharwani, commission Agent, Ramsagarpara, Raipur, as well as three rice millers of Tilda on 15.03.2016, which revealed that certain rice millers would procure bogus bills from brokers/entry operators without any actual purchase of goods. It was observed by the A.O that substantial incriminating material evidencing the aforesaid facts were found in the course of the survey proceedings. The A.O also noticed that survey action was carried out in the case of Nagarik Sahakari Bank, Raipur where some of the brokers/entry operators maintained their bank accou....
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....e amounts received by them towards sale consideration through cheques or RTGS were on the same day withdrawn in the form of cash leaving a miniscule amount of balance in their bank account; (iii) that the assessee had failed to produce transportation details evidencing the supply of goods from the aforementioned parties; and (iv) that the suppliers had neither accounted for the purchases made by the assessee nor paid taxes thereon, thus, concluded that the assessee had not made any genuine purchases of Rs. 14.41 crore (approx.) from the aforementioned parties. Accordingly, the A.O after drawing support from certain judicial pronouncements held the purchases that the assessee had claimed to have made from the aforementioned parties as bogus and disallowed 25% of the aggregate value of the same i.e. Rs. 3,60,33,063/- (25% of Rs. 14,41,32,250/-). 8. Apart from that, the A.O made an addition towards peak amount of Rs. 10 lacs towards unexplained investment which the assessee would have made for carrying out the aforementioned unaccounted transactions. Accordingly, the A.O vide his order passed u/s. 143(3) r.w.s. 147 of the Act, dated 24.12.2028 after, inter alia, making the aforesai....
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....der passed u/s. 143(3) of the Act, dated 31.03.2016, Page 26-33 of APB. The Ld. AR submitted that the A.O while framing the assessment had, inter alia, held that the assessee had not made genuine sale of 143295 Qnts. of paddy/rice/broken rice and had only provided accommodation entries. The Ld. AR submitted that the A.O based on his aforesaid observation had after, inter alia, treating the assessee as an accommodation entry provider made an addition of commission income @ Rs. 5/- per Qntl. i.e. 143295 Qntl X Rs. 5/- per Qntl.=Rs. 7,76,475/-. 13. Carrying his contention further, the Ld. AR submitted that purchases of Rs. 14,41,32,250/- that were held by the A.O as bogus purchases formed part of his total purchases of Rs. 2,03,12,76,610/- i.e. 143295 Qntls. of paddy/rice/broken rice made during the subject year. The Ld. AR on being called upon to fortify his aforesaid claim had taken us through the synopsis filed by him dated 28.10.2024. The Ld. AR on being called upon to substantiate the veracity of the aforesaid facts and figures as was canvassed before us, had drawn our attention to the assessee's trading and profit and loss account dated 31.03.2013, which revealed the total pu....
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....y tenbogus benami concerns, which though were projected as proprietorship concerns of certain individuals but were actually owned by him. Also, the A.O observed that the respective individuals who were projected as proprietors of the aforesaid concerns had by their respective "affidavit" deposed that they were merely acting on behalf of the assessee, viz. Shri Kamlesh Keshwarni. Accordingly, it transpires that the A.O had initiated the reassessment proceedings inter alia, for the reason that as per the information that had surfaced in the course of the survey proceedings conducted u/s. 133A of the Act u/s. 133A of the Act on 15.03.2016, revealed that the purchases of Rs. 14,41,32,250/- made by the assessee in his proprietary concern, viz. M/s. Keshwarni Rice Mills (supra) were actually bogus purchases i.e. goods which though were projected to have been purchased from the aforementioned 6 parties were actually procured from the open/grey market. Apart from that, the case of the assessee was, inter alia, reopened for the reason that the commission income of Rs. 5/- per Qntl. earned by the assessee by providing bogus purchase bills through his bogus benami concerns had escaped assessm....
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....come chargeable to tax had escaped assessment. 17. Although the Ld. AR in support of his aforesaid contention had relied on the judgment of the Hon'ble High Court of Delhi in the case of Shourya Infrastructure (P) Ltd. Vs. ITO, 157 taxmann.com 730, but the same being distinguishable on facts would not carry his case any further. In the aforesaid case, the Hon'ble High Court had observed that as the A.O while framing the original assessment u/s. 143(3) of the Act, dated 28.02.2014 had scrutinized the transaction of sale of land and accepted the assessee's claim, therefore, he could not have thereafter, based on a mere "change of opinion" that the sale transaction of the subject land was on capital account and provisions of Section 50C of the Act were applicable, initiated the proceedings u/s. 147 of the Act. As observed by us hereinabove, in the present case of the assessee, the facts, viz. (i) that the assessee owned 10 bogus benami concerns through which accommodation entries were being provided by him to certain beneficiaries was not there before the A.O in the course of the original assessment proceedings; and (ii) that the post survey investigation of the bank accounts of th....
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....as been underassessed. (emphasis supplied by us) We find that as per "Explanation 2(c)(i), of Section 147 of the Act, as was then available on the statute, the same was applicable in a case where an assessment had been made but income chargeable to tax was underassessed. Apart from that, we find that the A.O while recording the "reasons to believe", had at the threshold stated that scrutiny assessment in the case of the assessee was framed u/s. 143(3) r.w.s. 144 of the Act, dated 31.03.2016, wherein his income was assessed at Rs. 33,00,380/- as against the returned income of Rs. 7,38,440/-. We find that the aforesaid facts were stated in the "reasons to believe" dated 05.02.2018 that had been approved by the Jt. CIT vide his approval dated 06.02.2018. 20. Although we are not in oblivion of the fact that at Sr. No.8 & 9 of the "proposal form" (supra) the Jt. CIT had wrongly mentioned that the assessment in the case of the assessee is proposed to be made for the first time, and also had failed to provide the details of the original assessment that was earlier framed u/s. 143(3) of the Act, dated 31.03.2016, but the same would not be fatal to the assumption of jurisdiction fo....
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....) that was made by the A.O. For the sake of clarity, the observations of the CIT(Appeals) on the aforesaid issue are culled out as under: "3.1.5 During the appeal proceeding the appellant company to submitted the reply as under:- "The assessee is running a 'trading concern' in a proprietary concern M/s.Kesharwani Rice Mill, Raipur, which deals in trading in paddy, rice & broken rice, thus, it is engaged in 'trading activities' of paddy, rice & broken rice. The total sales for the F.Y. 2012-13 comes to Rs. 20.39 crores as per audited trading & P & L account. No 'manufacturing activity' has been done by the assessee during the F.Y. 2012-13, in other words, there is no question of any kind of suppression of 'yield' of any item traded in. Working of manufacturing and trading portion during the year is as under:- Total turnover (i.e. sales) Rs. 20,39,52,845 Manufacturing portion (Rs.Nil (0%) Trading portion (Rs.20,39,52,845 (100%)] Paddy sales at Rs. 1175.35L + rice sales at Rs. 703L + Broken Rice sales at Rs. 161.17L Trading portion treated as genuine by the Ld. AO Rs. 610.84L (29.95%) Trad....
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....o. 7 Pg No. 19 and stated in Para No. 8 Pag No.20 as under: "8. As mentioned in Point 11-13 of the above referred order, the AO has rightly made disallowance of 25% of the bogus purchases which clearly applies to the present case also. Accordingly, the submission of the assessee is not accepted and 25% of such purchase expenses of the assessee are not allowed on account of being bogus purchases. The facts mentioned above reveals the said amounts of bogus purchase which leads to rejection of books of account for the limited purpose as per sec.145(3). For the reasons detailed above, the purchases recorded in the books of account of the assessee amounting to Rs. 14,41,32,250 are held to be bogus and 25% of such purchase amount works out at Rs. 3,60,33,063 is hereby added to the total income of the assessee." 3.1.6 It further submitted that the assessee's case does not fall in the category of Sanjay Oil Cake Industries (2009) (Guj HC) being on distinguishable facts which is enumerated in Para No.1.20, Pg No.15 of this submission in the sense that, the case of Sanjay Oil Cake Industries was a 'manufacturing concern' and in that case the revenue has proved b....
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....also shown sales out of purchases made from Raj lmpex which were also *accepted by the Revenue, no que of law arises. 4. TA is dismissed." The above judgment of Guj HC has ben affirmed by the Hon'ble SC in Tejua Rohitkumar Kapadia (2018) 94 taxmann.com 325 (SC). That the Ld. AO has not doubted the entire quantity of opening stock, closing stock and the quantity traded during the year under consideration i.e. AY 13-14, in other words, where sales made out of such purchases were not disputed or questioned and the resultant profit on such sales had been accepted in toto by the Ld.AO, disallowing such purchases as bogus purchases is unjustifiable, invalid. Alternatively, not the entire amount, but the profit margin embedded in such amount may be subjected to tax. Further, the Ld.AO did not find any 'inflation' in purchase price for coming to the conclusion that the purchases are bogus, the addition made at Rs. 3,60,33,063 may kindly be deleted." 3.1.8 From the reply of assessee contention is coming out that the case of assessee is not a manufacturing concern but a trading concern, hence it is distinguishable from 'Sanjay Oil Cake Industries' case. ....
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....dicates that before passing assessment order dt.31.03.2018, the Ld. AO concluded a thorough inquiry on the aspects including the purchases made by the assessee from Sharma group aggregating Rs. 63.90 crores and having considered the contentions of the assessee, Ld. AO reached a conclusion that the material purchased from the Sharma was bogus, and since the assessee itself offered rate of GP in business at approximately. 8% however, to recover any further leakage of revenue, 0.25% was to be added to the rate offered by the assessee. Basing on this premise, Ld. AO recalculated the GP at 9% of the sales turnover by rejecting the books of account of the assessee u/s. 145. According to AO the difference ween 9% of the turnover, the aggregate amount of the GP already declared by the assessee and the additions made during the earlier assessment u/s. 153A had to be added. Decision on similar line has been given by ITAT Mumbai in case of Ratnagiri Stainless Pvt. Ltd. Vs ITO ITA No. 4463/Mum/2016 Dated 04.04.2017. Facts are as under- "The AO, on the basis of information received from Dy. Director of IT (Inv.) that assessee had received bogus purchase invoice from 28 entry p....
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....ngs u/s. 133A of the Act, dated 15.03.2016 had accepted that he in lieu of commission income was providing bogus purchase bills to rice millers/traders i.e. the beneficiaries, and had explained at length the modus-oparandi that was adopted by him to facilitate the said nefarious activity. Rather, the assessee in reply to Question No.25 of his statement recorded during the course of survey proceedings conducted u/s. 133A of the Act, dated 15.03.2016 had admitted that he was involved in the business of providing bogus bills since the year in question i.e. F.Y.2012-13 (i.e. the year under consideration). Also, the assessee in reply to Question No.58 of his said statement had stated that he was in receipt of commission of Rs. 5/- per Qntl (in cash) for providing bogus bills which, however, was not disclosed by him in his return of income. Further, the assessee in reply to Question No.3 of his statement recorded on 30.03.2016, had stated that there was no actual supply of goods but only bogus bills were provided to the beneficiaries. Apart from that, the assessee in reply to Question No 5 & 7 of his statement recorded on 30.03.2016 (supra), had also explained as to how the mandi-anugya ....
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....i that was adopted by him for deriving commission income from the said nefarious activity. 26. Be that as it may, the issue involved in the present appeal hinges around the quantification of the profit element which the assessee would have made by procuring the goods not from the aforementioned six bogus concerns from whom purchase bills were obtained, but at a discounted value from the open/grey market. We find that the CIT(Appeals), for quantifying the profit which the assessee would have made by procuring the goods at a discounted value from the open/grey market, as against the value booked in his books of accounts based on the bogus purchase bills of the aforesaid bogus/hawala parties, had after by taking cognizance of the fact that in the business of rice millers/traders the GP rate varied between 3% to 10% adopted GP rate of 10% had after allowing credit of the GP rate of 1.53% that was already disclosed by the assessee in his audited books of accounts, thus, made a balance addition of 8.47% of the value of the bogus purchases. As such, the CIT(Appeals) had sustained the addition of Rs. 1,22,08,002/- (out of the addition of Rs. 3,70,33,063/- made by the A.O). 27. We hav....
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....s the assessee has earned Rs. 7,16,475 as commission income which has been added by the Ld AO in the A. Y. 2013-14 (i.e. in original scrutiny assessment dated 31.03.2016), which has not disputed by the assessee and since, it is not dispL4ed by the assessee in first appellate proceedings before your Honor, it means, the alleged income earned during the A.Y. 2013-14 at Rs. 7,16,475 be available to the assessee for the alleged unexplained investment i.e. Rs. 10 lakhs considered by the Ld. AO in the A.Y. 2013-14. The Ld. AO has not brought any material/evidence on record to substantiate his baseless proposition in this respect, thus the addition of Rs. 10,00,000/- on account of unexplained investment in purchase shown, in absence of any evidence/material brought on record by the Ld. AO, may kindly be deleted, Reliance is placed on: It is submitted in Vishnu Prasad Maharwal (2014) (Jai-Trib) dated 31.03.2014 held as under:- "3.6 We find force in the contention of the Ld. AR that this year was the second year of the assessee in contract business. However, in current year the contract receipts of the assessee have increased by more than 6 times from last year. The NP rat....
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.... sustained the addition of unexplained investment of Rs. 10 lacs (supra) made by the A.O, sustain the same. Thus, the Ground of appeal No.5 raised by the assessee is dismissed in terms of our aforesaid observations. 29. In the result, both the appeals filed by the assessee in ITA No.122/RPR/2024 and the appeal filed by the revenue in ITA No.135/RPR/2024 for A.Y.2013-14 are dismissed in terms of our aforesaid observations. ITA No.123/RPR/2024 (Assessee's appeal) ITA No.136/RPR/2024 (Revenue's appeal) A.Y.2014-15 30. We shall now take up the captioned cross-appeals filed by the assessee and the revenue for A.Y.2014-15, wherein the assessee has assailed the impugned order on the following grounds of appeal before us: "1. On the facts & circumstances of the case and in law, Id CIT(A) has erred in sustaining addition of Rs. 1,36,78,421 on count of adhoc estimation of GP of 10% on alleged bogus purchases of Rs. 15,99,81,541 without giving any basis for such arbitrary estimation; while the assessee is a trader in goods i.e., paddy, rice and broken rice; corresponding sales has been accepted; there cannot be a case of "bogus purchase" in case of a "trader in goods" ....
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....in deleting the addition of Rs. 2,63,16,964/- out of total addition of Rs. 3,99,95,285/-, by assuming that the assessee had made alternative actual purchases when the assessee has not proved the same with any verifiable documents?" 31. Succinctly stated, the assessee had filed his return of income for A.Y.2014-15 on 29.11.2014, declaring an income of Rs. 11,85,790/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 32. During the course of assessment proceedings, the A.O observed that the assessee had during the subject year claimed to have made purchases aggregating to Rs. 23,26,56,741/- from 9 tainted parties, as under: Sr. No. Name of the Bogus firm Amount of purchase Peak purchase amount Date of peak purchase 1. M/s. Agrawal Agro, Dunda, Raipur Rs.3,83,06,950/- Rs.5,58,750/- 11/11/2013 2. M/s. Shrikhand Agrotech, Raipur Rs.1,14,89,000/- Rs.5,43,750/- 03/09/2013 3. M/s. Hardaha Agency, Abhanpur, Raipur Rs.1,60,81,691/- Rs.4,48,750/- 02/05/2013 4. M/s. Sakshi Gopal Corporation, Raipur Rs.1,18,35,000/- Rs.3,81,250/- 13/02/2014 5. M/s. Bajrang Fo....
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.... the aforesaid parties. However, the A.O observed that the assessee a/w. brokers in their respective statements recorded on oath u/s. 131 of the Act on 15.03.2016, had admitted that only purchase bills were procured and no actual purchase of goods were made from the aforementioned parties. Further, the A.O observed that the assessee in his statement recorded u/s. 131 of the Act, dated 21.12.2016 had admitted of having earned commission of Rs. 40,41,225/- from the transactions made during the year under consideration in the firms, viz. (i) M/s. Agrawal Agro; (ii) M/s. Annapurna Foods; and (iii) M/s. Shyamji Rice Agrotech. It was observed by the A.O that the assessee had admitted that the aforementioned firms which though were actually owned by him were being run in the name of third parties. Also, the A.O observed that the assessee could not explain the peak investment that was made by him for carrying out the aforementioned bogus purchase transactions in the cases other than the aforementioned three firms which were declared as his own firms. Considering the aforesaid facts, the A.O held the amount of Rs. 40,41,225/- (supra) as the income of the assessee u/s. 68 of the Act. 35. ....
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....e assessee based on correct amount of addition of Rs. 3,99,59,385/- (supra) had assailed the same before the CIT(Appeals) who had thereafter restricted the said addition to Rs. 1,36,78,421/-. 38. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) who partly allowed the same. Apropos the addition of Rs. 3,99,95,385/- (supra) that was made by the A.O by disallowing 25% of the alleged bogus purchases of Rs. 15,99,81,541/- that the assessee had claimed to have made from 6 parties (out of 9 parties), the CIT(Appeals), holding a conviction that GP rate of 10% (as was prevailing in the trade line of rice business) could fairly taken care of the aforesaid issue, thus, after referring to the GP rate of 1.45% that was already disclosed by the assessee during the subject year, scaled down the addition to an amount of Rs. 1,36,78,421/- (8.55% of Rs. 15,99,81,541/-). For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: "I have gone through the detailed investigation in this rice miller's case assessment order of assessee and the reply of assessee during the appeal proceeding. I thoroughly examined the reply of assessee w....
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....owever, to recover any further leakage of revenue, 0.25% was to be added to the rate offered by the assessee. Basing on this premise, Ld. AO recalculated the GP at 9% of the sales turnover by rejecting the books of account of the assessee u/s 145. According to AO the difference between 9% of the turnover, the aggregate amount of the GP already declared by the assessee and the additions made during the earlier assessment u/s 153A had to be added. Decision on similar line has been given by ITAT Mumbai in case of Ratnagiri Stainless Pvt. Ltd. Vs ITO ITA No. 4463/Mum/2016 Dated 04.04.2017 Facts are as under- "The AO, on the basis of information received from Dy. Director of IT (Inv,) that assessee had received bogus purchase invoice from 28 entry providers, reopened assessment. No evidence was produced by assessee to show that purchases were genuine by actual delivery of goods on said parties. Notice u/s 133(6) were returned unserved. One of the parties appeared before the AO and confirmed that the transaction were bogus. Assessee having purchased the goods from grey market for earning higher profits, GP rate 12.5% applied by AO and confirmed by CIT(A) was justified. ....
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....t of the alleged 3 firms which has been added by the Ld. AO on the basis of statement recorded on 21.12.2016 which forms part of the assessment order dt. 23.12.2016. It is not disputed by the assessee in first appellate proceedings before your Honor, it means the alleged income earned of Rs. 40,41,225/- during the A.Y. 2014-15 be available to the assessee for the alleged investment considered by the Ld. AO in the A.Y. 2014-15, thereafter, in the A.Y. 2013-14 also the addition of Rs. 7,16,475/- has been made by the Ld. AO on the count of commission income earned, which also not disputed by the assessee and thus, it will also be available for the alleged investment considered by the Ld. AO in the A.Y. 2014-15. The Ld. AO has not brought any material/evidence on record to substantiate his baseless proposition in this respect, thus, the addition of Rs. 27,93,750/- on account of unexplained investment in purchases shown, in absence of any evidence/material brought on record by the Ld. AO, may kindly be deleted, Reliance is placed on: It is submitted in Vishnu Prasad Maharwal (2014) (Jai-Trib) dated 31.03.2014 held as under:- "3.6 we find force in the contention of the Ld. AR th....
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....eby confirmed. The appeals of ground is dismissed. 4. In the result, appeal is partly allowed." 40. Both the assessee and the revenue being aggrieved with the order of the CIT(Appeals) have carried the matter in appeal before us. 41. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 42. As the facts and issues involved in the present cross-appeals remains the same as were there before us in the cross-appeals for the immediately preceding year i.e. ITA No. 122/RPR/2024 & ITA No.135/RPR/2024 for A.Y.2013-14, therefore, the view therein taken shall mutatis-mutandis apply for the purpose of disposing of the present cross-appeals i.e. ITA No.123/RPR/2024 & ITA No.136/RPR/2024 for A.Y.2014- 15. 43. At the same time, for the sake of clarity, we briefly cull out our observations qua the facts involved in the present cross-appeals, as under: (A) the A.O observed that the assessee had during the subject year made bogus purchas....
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....is dismissed in terms of our aforesaid observations. 46. In the result, the appeal filed by the assessee in ITA No.123/RPR/2024 and the appeal filed by the revenue in ITA No.136/RPR/2024 for A.Y.2014-15 are dismissed in terms of our aforesaid observations. ITA No.124/RPR/2024 (Assessee's appeal) ITA No.138/RPR/2024 (Revenue's appeal) A.Y.2015-16 47. We shall now take up the captioned cross-appeals filed by the assessee and the revenue for A.Y.2015-16, wherein the assessee has assailed the impugned order on the following grounds of appeal before us: "1. On the facts and circumstances of the case and in law, approval u/s. 151(2) by Jt.CIT is invalid; in the reasons recorded, there is no escaped income; in the "Proposal Form" for seeking approval u/s. 151, escaped income at 'nil' (Sl.No.6); without pointing out mistake committed by AO in the "Proposal Form" put up before him; non application of mind by Jt.CIT while granting such mechanical approval on his part; in absence of a valid approval as mandated by law u/s. 151, reopening u/s148/147 would be invalid and would be liable to be quashed; relied on Kalpana Shantilal Haria (2017) (Bom HC); Sea Glimpse....
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....gned order on the following grounds of appeal before us: "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,53,41,456/- out of total addition of Rs. 3,86,06,728/-, ignoring his own finding in his order that "there is no doubt regarding bogus purchases of Rs. 15,44,26,911/- had been made by the assessee" whereby he has upheld the basic finding of AO in entirety? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,53,41,456/- out of total addition of Rs. 3,86,06,728/-, ignoring the ratio of several judgements including the following in which 100% disallowance on account of bogus purchases has been upheld: a) Para 6 of N.K. Industries Ltd. [2016] 72 taxmann.com 289 (Gujarat), in which SLP of the assessee has been dismissed vide [2017] 84 taxmann.com 195 (SC)? b) Decision of ITAT Mumbai in the case of Soman Sun City in I.T.A. No. 2960/Mum/2016? 3. Without prejudice to the above, whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the add....
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....s. Hanuman Food Products and M/s. Shrinath Paddy process. It was observed by the A.O that the assessee had vide his reply dated 09.11.2017 admitted that out of the total transactions of Rs. 49.34 crore with M/s. Vinayak Trading Company, he had earned commission income of Rs. 16, 44,830/-. Accordingly, the A.O based on the admission of the assessee made an addition of total commission of Rs. 62,83,788/-. 51. The A.O called upon the assessee to substantiate the authenticity of the purchases which he had claimed to have made from the aforementioned parties by placing on record documentary evidences, viz. gate entry pass, proof of transportation, delivery challans of goods, entry in purchase and stock register, confirmation from the respective party etc. Also, the A.O had offered the assessee to cross-examine the brokers and the persons whose statement were recorded by the department. However, as the assessee could not substantiate the authenticity of the aforesaid purchases by placing on record any documentary evidence that were called for by the A.O. Therefore, the A.O was of the view that the assessee had failed to substantiate the authenticity of his claim of having made genuine....
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....he case is little bit distinguishable from Vijay Proteins Ltd, relied by the Ld. AO Secondly, there is no doubt regarding bogus purchases of Rs. 15,44,26,911/- had been made by the assessee. Thirdly, a detailed investigation has been done to prove these purchases as bogus and even cross examination was also done by rice millers during the investigation. As the Ld. AO has rejected books of account for limited purpose, but he had not questioned the sales. This is a well settled proposition that she sales cannot be made without purchases. So, if the purchases have not been made from the ten parties mentioned in assessment order then the assesses should have made these purchases from somewhere else. In such cases of bogus purchases, actual purchases were made from other parties and mainly in cash. These purchases are always done at lower rates. Taxes and other expenses are also saved. Now, the assessee should have disclosed the actual parties and actual amount of purchase. These purchases might have been purchased from gray market and in cash. There is a strong possibility of a lower rate purchases as other taxes and expenses will b....
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....ue." In the line of business of rice millers and traders in the state, the GP varies from 3% to 10% depending on various factors such as price of paddy paid by the government, level of crop production and quantity of procurement committed by the statement government. Adopting a GP of 10%, since the GP shown by the assessee is 1.41%, an addition of 8.59% on the suspicious purchases is hereby sustained, attributing to the extra profit earned by showing purchases. Therefore on a purchase of Rs. 15,44.26,911/- an amount of Rs. 1,32,65,272/- is hereby sustained and balance addition is deleted." 54. Apropos the addition of Rs. 26,80,650/- that was made by the A.O towards unexplained investment made by the assessee for carrying out unaccounted transactions of making bogus purchases, we find that the assessee in the course of proceedings before the CIT(Appeals), submitted that the addition of Rs. 22 lacs was already admitted by him. Accordingly, the A.O had made a balance addition of Rs. 4,80,650/-[Rs.26,80,650/- (-) Rs. 22,00,000/-]. The CIT(Appeals) after taking cognizance of the fact that the A.O had made addition towards unaccounted investment of Rs. 26,80,650/-, found no i....
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....ed by the assessee and thus, it will also be available for the alleged investment considered by the Ld. AO in the A.Y. 2015-16. The Ld. AO has not brought any material/evidence on record to substantiate his baseless proposition in this respect, thus, the addition of Rs. 4,80,650/- on account of unexplained investment in purchases shown, in absence of any evidence/ material brought on record by the Ld. AO, may kindly be deleted, Reliance is placed on: It is submitted in Vishnu Prasad Maharwal (2014) (Jai-Trib) dated 31.03.2014 held as under:- "3.6 we find force in the contention of the Ld. AR that this year was the second year of the assessee in contract business. However, in current year the contract receipts of the assessee have increased by more than 6 times from last year. The NP rate declared by the assessee in A.Y. 2008-09 was 6.01% which increased to 7.02% in A.Y. 2009-10. Therefore, in view of Bhawan VA Path Nirman (Bohra) & Co (Raj), the past history of the assessee is best guiding factor. Further, the result shown by the assessee is better than M/s. Rishabh construction(P) Ltd, Further the trading result is better because the entire cash and other found a....
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.... issues involved in the present cross-appeals remains the same as were there before us in the cross-appeals for the immediately preceding year i.e. ITA No.122/RPR/2024 & ITA No.135/RPR/2024 for A.Y.2013-14, therefore, the view therein taken shall mutatis-mutandis apply for the purpose of disposing off the present cross-appeals i.e. ITA No.124/RPR/2024 & ITA No.138/RPR/2024 for A.Y.2015- 16. 58. At the same time, for the sake of clarity, we briefly cull out our observations qua the facts involved in the present cross-appeals, as under: (A) the A.O observed that the assessee had during the subject year made bogus purchases from 10 parties aggregating to Rs. 15,44,26,911/- (supra). Accordingly, the A.O after rejecting the assessee's books of account u/s. 145(3) of the Act quantified the profit which the assessee would have made by purchasing the goods not from the aforementioned bogus parties, but from the open grey/market and worked out an addition @ 25% of the value of bogus purchases at Rs. 3,86,06,728/-. (B) On appeal, the CIT(Appeals) principally concurred with the A.O that the assessee would have made profit by procuring the goods not from the aforementioned....