2018 (4) TMI 386 - AT - Income Tax

Addition of bogus purchase - Held that - It is a case of bogus purchase in which the addition was made on account of information received from the Sales Tax Department, Maharashtra Government. Subsequently, the notices were given to the parties u/s 133(6) of the Act which were not served. The notice was given to the assessee who failed to prove the genuineness of the transaction. Anyhow sale is not disputed and books of account are not rejected. The matter was controversy has been adjudicated by Hon ble Gujarat High Court in the case of Simit P Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) in which the profit ratio @ 12.5% was taken into consideration on the basis of the GP of the assessee. Addition of purchases - Held that - The assessee has placed reliance upon the copy of bill of the Ajay stone. The assessee also placed reliance upon the copy of bills of M/s. Top Brick and Sand suppliers. The assessing officer is hereby directed to examine this fact in the light of the evidence adduced by the assessee by giving an opportunity of being heard to the assessee. Needless to say that if this addition has already been added the assessment year of 2009-10 then the same is not liable to be the part of the total amount to the tune of ₹ 57,96,338/-. The said addition would be double addition. The said amount after verification would be liable to be excluded from the amount of ₹ 57,96,338/- for the purpose of deciding the profit ratio @ 12.5% which has been adjudicated at the time of adjudication upon the issue no. 1 to 4. Accordingly, this issue is decided in favour of the assessee against the revenue.

Summary

Issues Involved:
1. Addition of bogus purchase in the income of the assessee.
2. Inclusion of purchases from the assessment year 2009-10 in the assessment year 2010-11.
3. Deletion of adhoc disallowance.

Issue Nos. 1 to 4:
The case revolves around the addition of bogus purchase in the assessee's income. The Assessing Officer received information indicating hawala entries in purchase bills. Notices were issued to parties and the assessee failed to prove the genuineness of the purchases, resulting in an addition of ?57,96,338 to the income. The CIT(A) upheld the addition. The assessee contended that books of account and bills were not considered, hence the purchase was genuine. However, the department argued that the genuineness was not proven. Following a similar case precedent, the Tribunal restricted the addition to 12.5% of the bogus purchase amount, partly allowing the appeal.

Issue No. 5:
Regarding purchases from the assessment year 2009-10, the assessee argued that these should not be included in the assessment year 2010-11. Evidence was presented, and the assessing officer was directed to examine this fact and exclude any double additions. The issue was decided in favor of the assessee against the revenue.

Issue No. 6:
The assessee requested deletion of adhoc disallowance, which was addressed in the previous issues. Consequently, this issue was decided against the assessee in favor of the revenue.

Issue No. 7:
This issue was deemed formal and did not require adjudication.

In conclusion, the appeal by the assessee was partly allowed, with the Tribunal making decisions on various issues related to the addition of bogus purchases, inclusion of purchases from the previous assessment year, and deletion of adhoc disallowance. The judgment provided detailed reasoning and analysis for each issue, ensuring a fair and comprehensive resolution.