TaxTMI 
TaxTMI 
2025 (6) TMI 281
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....addition against the fact and circumstances of the case. 3. That the Ld. CIT(A), NFAC, Delhi has erred in ignoring the documentary evidences of the genuine purchases made by the assessee like Tax invoices of the party, e-way bill, GR, Truck Permit, Vehicle registration Number, AGT receipts, weighing slips, Toll tax slips, Driver License of the Vehicle, Aadhar Card of the Driver, PAN of the Transporter, Driver photo with material loaded in truck at the premises and evidences for payments made in lieu of purchases, confirmed copy of ledger accounts and all other evidences, which proved the genuineness of purchases made by the assessee. 4. That the Ld. CIT(A), NFAC, Delhi wrongly and illegally upheld the additions after coining a new term 'untested purchases' merely on guess, surmises and conjectures that too after accepting that goods purchased have been received by the appellant. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off." 3. The Department has also filed an appeal in ITA No. 500/Chd/2024 in which following grounds have been taken:- "1. Whether on the fact....
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.... ................. "10.9 After careful consideration of the facts and circumstances, I am of the opinion that the observation of the AO seems justified that the purchases were indeed made from grey market to shoot up the profit margin but the purchases were not entirely bogus as the sales were considered to be valid and the payments were recorded in the books and the same were made through cheques. However, it was observed that the A.O. determining the profit percentage 12.5% and disallowing the same from the purchase did not appear to be logical. 10.10 Accordingly, looking into the facts of the instant case and judicial precedents on the subject, which have held that in case of bogus purchases, if the sale is not in doubt, then only the profit element embedded in such purchases may be subject to tax in the hands the assessee. As the appellant reported the Gross Profit Ratio for the F.Y 2020-21 at 5.94% which comes off as reasonable and therefore, in view of the above discussion giving due diligence to the judicial rulings stated above, the A.O. is therefore directed to re-compute the disallowance at 5.94% of the total bogus purchase. Hence, this contention ....
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....of each and every doubtful party. i) The CA of supplier party, also confirmed the GSTR-I, duly filled on GSTR portal by the suppliers for reporting its sales stated above and also confirmed the ledger account. ii) On all such invoices, GST Number has been mentioned. iii) The E-Way bill of each of above suppliers, which is compulsory for movement of goods, submitted, not doubted. The E-way bill can be generated only when there is a valid/active GST Registration. iv) Copies of the Truck Bilty i.e. GR, in which, the goods were loaded and supplied to the assessee company, not doubted. v) goods having been transported to the premises of assessee was also filed in the shape of following documents: - * Copy of the Truck permit, which proves that Vehicle/Truck Number having valid permit for transporting the goods from concerned state to the assessee premises. Copy of the Driver License, who operated the Vehicle and supplied the goods to the assessee. * Copy of the Aadhar Card of the Driver, Pan Number of Truck Owner/Transporter, Contact Number of the Driver. * Copy of the cheque for freight payment endorsed in the name....
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....ST Number or such parties have surrendered the GST registration, no adverse view could be drawn against the purchases already made. Our attention was drawn by the Ld. Counsel to rule 138 of GST rules, wherein, it is pointed out that the 'e-way will' can be issued by a person, who has valid registration Number and 'e-way bill' cannot be issued manually, but it is filled online and generated through online 'portal' and bears a unique number prior to movement of goods. Further, as per 'rule 138, 'e-way bill' cannot be issued, if the registered person has not filed GST return for two consecutive two months and e-way bill cannot be issued if the GST Registration has been cancelled. 13. The Ld. Counsel of the assessee also stated that the GST Registration was valid at the time of generation of 'e-way bill' and that the assessee had purchased the, goods only when the GST registration of the supplier was 'active'. Thus, no doubt could be raised on such purchases made from the alleged doubtful parties. 14. The Ld. Counsel of the assessee also relied upon the judgment of Calcutta High Court in the case of M/s LGW Industries Limited an....
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....f the assessee have been reproduced in the order and the finding on this issue have been discussed from. The CIT(A) has disproved the finding of the Assessing Officer with regard to rejection of books of accounts u/s 145(3) of the Act and, finally he had held that only profit element embedded in such purchases may be subjected to tax and applied the gross profit ratio for the financial year under consideration @ 5.94% on the total alleged bogus purchases and against that, the assessee is in appeal and, whereas, the department is in appeal only upon the deletion of above addition on account of such bogus purchases, wherein, the Assessing Officer had applied a rate of 12.5% on the alleged bogus purchases of Rs. 68,26,38,327/-. 19. The Ld. Counsel of the assessee has argued that the CIT(A) having accepted the books of accounts of the assessee and rejected the contention of the Assessing Officer about the rejection of books of accounts, thus, no doubt could be made on account of sale and purchases and neither with regard to quantum of purchases and stock record and other quantitative details having not been disproved, either by the Assessing Officer/CIT(A) and relied upon on number ....
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....chase transactions with one 'D' - On basis of said complaint, Commissioner passed a revisional order setting aside assessment - In appellate proceedings, Tribunal having noticed copies of invoices and challans, proof of payments, bank statements, transportation payments, vouchers for movement of goods and like documents, concluded that transactions between assessee and "D* were not bogus or fraudulent - Accordingly, impugned revisional order was set aside - High Court upheld order passed by Tribunal - Whether, on facts, SLP filed against decision of High Court was to be dismissed - Held, yes [In favour of assessee]." 22. Our attention was also drawn to the judgment of Supreme Court in the case of PCIT Vs Tejua Rohit Kumar Kapadia, reported in 94 taxman. Com 325, in which, it has been held as under: - "Section 69C of the Income-tax Act, 1961 - Unexplained expenditure (Bogus purchases) - Assessing Officer had disallowed some expenditure treating purchases as bogus and made addition - High Court in impugned order noted that purchases made by assessee-trader were duly supported by bills and payments were made by account payee cheque and seller also confirmed transac....
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....ted by the CIT (A), the books of accounts of the assessee stands accepted and it was found that no sales were undervalued or the purchases were inflated. Though, both the assessee and department have accepted the fact that the raw material have been reached at the factory premises of assessee concern and regarding the profit element, since it has been proved by the assessee, beyond any iota of doubt that since the purchases were not under-valued or inflated and, thus, the sustaining of addition by applying the gross profit rate of 5.94% on the alleged bogus purchases was not justified and the appeal of the department be dismissed. ITA No. 500/Chd/2024 - Revenue's Appeal : 25. Now, we shall deal with the appeal filed by the Revenue. 26. The Ld. CIT, DR brought to our attention to the facts and circumstances of the case based on addition made by the Assessing Officer and argued that the notices sent to the doubtful parties u/s 133(6) were not responded to by those parties and, thus, the said parties are bogus and, as such, the Assessing Officer was fully justified in applying a profit rate of 12.5% on such purchases of raw material from the parties concerned. It was also arg....