TaxTMI 
TaxTMI 
2025 (6) TMI 2000
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....connected and arise out of identical set of facts and circumstances. Therefore, all six appeals were heard together and are being disposed of by way of this consolidated order, for the sake of convenience and judicial economy. Facts in Brief 2. The assessee is a company engaged in the business of manufacturing and trading of copper products. For the relevant assessment years under consideration the assessee filed its return of income declaring profits from business. 3. In the assessment year 2018-19, the case was reopened under section 147 of the Act based on information received from the Investigation Wing of the Department, indicating that the assessee had entered into transactions with accommodation entry providers, including M/s. RCI Industries and Technologies Ltd. and others. It was further revealed during the proceedings that the assessee had made purchases from entities flagged in GST investigations as bogus suppliers. The Assessing Officer (AO) issued notice under section 148 and framed the reassessment under section 143(3) r.w.s. 147. On finding that the assessee had not satisfactorily discharged the onus of establishing the genuineness of purchases and the ident....
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....,26,352/- 49,84,90,503/- 412,48,43,029/- Gross Profit Rate Applied by AO 12.50% 12.50% 12.50% Addition Made by AO (Rs.) 11,61,90,794/- 6,23,11,313/- 51,55,18,437/- Assessed Income (as per AO's Order) 14,75,64,304/- 12,84,41,303/- 58,13,02,955/- Date of CIT(A)'s Order 22.12.2023 18.12.2023 20.12.2023 Gross Profit Rate Applied by CIT(A) 5% 6% 6% 7. Aggrieved by the orders of CIT(A) both Revenue, as well as assessee are in appeal before us raising following grounds of appeal: In Revenue's appeal - ITA No. 254/Ahd/2024 - A.Y. 2018-19 1. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) was justified in restricting the addition made by the Assessing Officer @ 12.5% on bogus purchase to 5% without taking into consideration facts of the case? 2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 3. It is, therefore, prayed that the order of Ld. CIT(A)may be set aside and that of the Assessing Officer be restored. In Revenue's appeal - ITA No. 255/Ahd/2024 - A.Y. 2020-21 1. Whether on t....
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.... 7. Both the lower authorities have erred in not granting set off of the profit already declared in the return of income on alleged bogus purchases against the estimated profit. 8. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 9. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s. 234A/B/C/D of the Act. 10.The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in initiating penalty u/s. 270A of the Act. 11. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. In Assessee's appeal - ITA No. 275/Ahd/2024 - A.Y. 2020-21 1. The Ld. ....
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....on resulting in gross violation of principles of natural justice. 3. The Ld. CIT(A) has erred in law and on facts in partly confirming the addition of bogus purchases to the extent of Rs. 24,74,90,582/- [6% of Rs. 412,48,43,029/-] 4. Alternatively, and without prejudice, the estimation of profit at the rate of 6% is highly excessive and does not reflect the real income earned of the appellant. 5. Both the lower authorities have erred in not granting set off of the profit already declared in the return of income on alleged bogus purchases against the estimated profit. 6. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s. 234A/B/C/D of the Act. ....
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....ion. 11. We have carefully considered the rival submissions, perused the orders of the lower authorities, and examined the material placed on record. In all three assessment years, the core issue pertains to the addition made by the AO towards alleged non-genuine purchases from certain flagged entities, based on third-party information and report from the Investigation Wing. The AO rejected the books of account under section 145(3) and applied a GP rate of 12.5%, resulting in substantial additions. The CIT(A), however, granted partial relief by restricting the GP rate to 6%, which has been challenged in cross appeals. Before the CIT(A), the assessee submitted that it is engaged in the business of manufacturing copper and copper-based products and had made purchases from suppliers after due verification, supported by copies of purchase invoices, ledger confirmations of parties, PAN and GST registration details, quantitative records of input/output, stock registers and evidence of payment through regular banking channels. The assessee pointed out that the purchases were duly accounted for in its books and that the sales arising therefrom were never doubted by the AO. It was emphas....
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....he appellant company. As such, the decision of the Supreme Court in the case of N K Proteins Ltd (250 Taxman 22) (SC) would not apply to facts of the instant the case. 6.2 In the case of Pr. CIT Vs Surya Impex (2023) (148 taxmann.com 154) (Gujarat), AO had received report from Investigation Wing that assessee-firm received accommodation entries in form of bogus purchases from Shri Bhanwarlal Jain Group. However, assessee filed detailed evidence consisting of details of purchase, PAN and addresses of parties, purchase invoice, stock register, etc. On these facts, Hon'ble Gujrat High Court has upheld the findings of Tribunal in limiting addition in hands of assessee at the rate of 6 per cent of impugned purchases, taking note of the fact that sales was not disputed by the Assessing Officer and books of accounts were not rejected. 6.3 Hon'ble Bombay High Court in the case of Pr. CIT Vs S. V. Jiwani (2022) (145 taxmann.com 230) (Bombay) has held that where assessment was reopened on the basis of information received from Sales Tax Department that assessee had made purchases which seemed to be accommodation entries, entire purchase made by assessee could not be added b....
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.... also be considered as nongenuine. Therefore, we consider that in such types of transaction only the profit margin embedded in such transaction could be taxed. In such type of cases, the assessee procures the material from the grey market by paying cost and as the bills are not available for such transaction, obtaining bills from third party who after receipts of cheque from the assessee making him available the cash after deducting its commission. Since the sales were not doubted therefore it was proved that assessee was actually in possession of goods. The assessee has benefitted by receiving margin of grey market. The gross profit for the F.Y. 2009-10 to 2011-12 as provided in the order of Ld. CIT(A) in the case of the assessee is reproduced as under, .... .....After taking into consideration the aforesaid facts we consider that the addition to the extent of profit element embedded in the amount of purchases made from the said party is to be added. After considering the above facts and findings we consider it fair and reasonable to restrict the disallowance in the case of the assessee to the extent of 4 percent of the impugned purchases made by the assessee from the sai....