TaxTMI 
TaxTMI 
2025 (9) TMI 1127
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....he case and in law, the Ld. CIT(A) has erred in estimating gross profit 2 19.93% (GP ratio) on the said bogus purchases, despite of confirming that the assessee has neither substantiate the purchase nor the sales of specific purchase made from M/s Rajdhani Sales Corporation. 2. Brief facts of the case are that the assessee had filed its return of income for the assessment year 2011-12 declaring loss at Rs. 33,05,69,071/- on 30.11.2011 which was later revised on 10.9.2018 at an income of Rs. 33,05,69,071/-. The case was selected for scrutiny and consequently a reference was made to the Transfer Pricing Officer as the assessee company had entered into an international transaction with its associate enterprises within the meaning of section 92CA of the Act. The Transfer Pricing Officer vide order u/s. 92CA(3) dated 28.01.2025 had directed the AO to enhance the income of the assessee by Rs. 15,79,78,123/-. Accordingly, the AO enhanced the income by Rs. 15,79,78,123/- in the Draft Assessment Order sent to the assessee. Later the assessee filed the objections against the TP adjustments before the DRP who vide its order dated 27.11.2015 gave the directions to the TPO to recomputed the ....
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....person earlier and in the subsequent year. It was submitted that that books of accounts have been duly audited where such alleged bogus purchases have been reflected and no adverse comment has been offered. Ld. CIT(A) on going through the bills of Rajdhani Sales Corporation, has observed that there is no VAT or Sales tax number mentioned on such bills. During assessment proceedings, on enquiry, it was found that the said seller is not available on the given address. Further, from the transporter bills of National Road Carrier, it is observed that bill no. of National Road Carrier, Service Tax no. or GST etc has not been mentioned. The signature of driver is also not there. No value of freight is also mentioned in the said document. Therefore, the genuineness of the said bills are not proved. The stock details provided are basically the purchases, production and sales without details of the specific quality and quantity purchased from Rajdhani Sales Corporation. Further, these stock details are appellant's own register and through this the purchase made from alleged party, its conversion and subsequent sale cannot be matched or corroborated beyond doubt. The appellant could not ....
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....nd distinguishable on facts and ratio. Accordingly, it was held that appellant could not substantiate beyond doubt the genuineness of purchases made from Rajdhani Sales Corporation. During appellate proceedings, it has been stated by the appellant that even if the purchases are not considered genuine, the total amount of such purchases cannot be held as disallowable because the AO has not objected to the sales made by the assessee or doubted the genuineness of such sales. It is also stated that the AO has not rejected the books of accounts. Accordingly it is argued that alternatively the profit element embedded with such bogus purchases can only be considered. Before, Ld. CIT(A), assessee has placed reliance in the case of SHRI MEHUL K. МЕНТА VERSUS INCOME TAX OFFICER 15 (1) (3) in I.T.A. No.3227/Mum/2016 (2017) wherein, ITAT, Mumbai on the similar facts and circumstances has only confirmed the partly enhanced gross profits. It has been also held by the Hon'ble Bombay High Court in the case of M/s NIKUNJ EXIMP ENTERPRISES PVT LTD. [2015] 372 ITR 619 (Bom) that even though the suppliers are nonexistent and one of the parties denied having any busine....
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.... the period of four years, however, no failure was mentioned on the part of appellant to disclose the full materials. It is also stated that the original assessment was completed u/s 143(3) of the Act and hence, this addition cannot be made, in the absence of any allegation or substantive material, cogent evidence etc. It is further stated that AO has relied upon the report of Investigation Wing and no independent application of mind is done. The appellant has also argued that there is a change of opinion in this case as all the details were submitted before AO during first assessment proceedings and hence, this reopening is not valid, therefore, the proceedings u/s 147/148 of the Act is void and the order is required to be annulled. On going through the details and the reason to believe, it is found that AO has received information regarding purchases made by appellant during the year under consideration, where based on the STR report the seller i.e. Rajdhani Sales Corporation has withdrawn all the cash, received as payments, for which no cogent reasoning has been provided either by the said seller or the appellant. This practice was a clear indication that the said person has ....
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....assessment proceedings. The present assessment proceedings have been initiated after receipt of this fresh information. Therefore, this cannot be treated as change in opinion. Accordingly, the various judgments relied upon by the appellant is not applicable to the facts of this case and liable to be rejected. The appellant has also mentioned that the approval of PCIT is mechanical, however, no further arguments have been placed in this regard. On the other hand it is observed from the reasons recorded that worthy Pr. CIT has duly accorded her approval after having perused the reasons recorded. Therefore, this fact clearly shows that reasons recorded and approval granted by the competent authority is as per law and hence, the contention of appellant is not acceptable. Therefore, in view of the aforesaid factual matrix and the binding precedent as discussed in preceding paragraphs, the proceedings u/s 147/148 of the Act was rightly held to be in accordance with law. During the hearing, the Bench directed the Revenue to file the written submission on the issue of raising /arguing the issue of non-issuance of draft assessment order by the AO. Ld. DR submitted that the in the orig....