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TMI Blog2014 (9) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) TMI 1284 - ITAT AHMEDABAD] - assessee had not proved the purchase genuine - The supplier had already given affidavits that they have given bogus bills to the assessee - Therefore, burden is heavily on the assessee to prove that these transactions are genuine, which has not been discharged by it - the net profit @ 30% on bogus purchase is reasonable - The A.O. is directed to calculate 30% net profit on bogus purchase and compute the income – Decided partly in favour of assessee. - ITA No.2032/Ahd/2010 - - - Dated:- 14-3-2014 - Mukul Kr Shrawat And T R Meena, JJ. For the Appellant : Miss Nikita Brahmbhatt, AR For the Respondent : Shri K C Mathews, Sr. DR ORDER:- PER : T R Meena The assessee filed appeal delayed by 316 days, for which, he has filed the affidavit and narrated the reasons for not filing the appeal in time. For delay, the assessee relied upon the decision of Hon ble D Bench in case of Jayvantsinh N Vaghela vs. ITO in ITA Nos. 563 564/Ahd/2012 for A.Y. 2007-08 08-09, order dated 22.03.2013, wherein appeal was late by 328 days in A.Y. 07-08 and 158 days in A.Y. 08-09. The assessee also gave written reply on condonation of delay. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,32,750/- on the ground that the said purchases are bogus purchases despite of the fact that the appellant consumed the material in question. 5. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the AO in initiating the penalty proceeding u/s.271(1)(c) of the Income Tax Act 1961. 3. The first and second grounds of appeal are against reopening the case u/s. 147 148 which have not been pressed by the assessee. The same are dismissed as not pressed. 4. Ground no.3 4 are against confirming the addition on account of bogus purchase of ₹ 14,32,750/- by the CIT(A). The A.O. observed that inquiry was conducted by the department in case of M/s. Prakash Marbles Engineering Company, Dabhoi Road, Baroda for A.Y. 2002-03. It was found by the Assessing Officer that bogus purchase by way of accommodation bills for purchase of material without, in actually, any material being purchased, were procured from Shri Jabbarsingh Chauhan, Proprietor of M/s. Girnar Sales Corporation and Shri Navin Raval, Proprietor of M/s. Shiv Metal Corporation. The sale proceeds of such accommodation bills were deposited in current account numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.02.2002 M.S. Plate 1525 205875/- 18525 682150/- Total (a) + (b) = 7,50,600 + 6,82,150 = ₹ 14,32,750/- The ld. A.O. issued notice u/s. 148 of the IT Act on 15.01.2007 and assessee was asked to file return in response to this notice, which was complied by the assessee. The assessee is engaged in the business of undertaking contract for mechanical work viz. fabrication and erection of steel structures, piping, stop log gates, coarse screens, travelling water screens mainly for various Thermal Power Projects undertaken. The A.O. gave reasonable opportunity of being heard on this issue, which was afforded by the assessee. After considering the assessee s reply, the A.O. held that the persons from whom purchases were stated to have been made had denied the same by filing affidavit that they had issued bogus purchase bills to the party in the name of their fictitious firm. As per provisions of the IT Act, the onus to prove the genuineness of the claim made by the assessee in respect of any expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se purchases were made for the contract of GMDC and goods were delivered at GMDC, Kuchchh only through bill nos. 12,13 14. Accordingly, payments were relived to those parties. The ld. A.R. has drawn our attention on page no.51 and argued that partner of the assessee firm has filed the affidavit and this purchase has included in the total purchases of the assessee firm. He further drew our attention on page no.92, where identical issue by the Hon ble A Bench in case of Shri Alap Shirishbhai Derasary vs. ACIT in ITA No. 1101, 1102 1103/Ahd/2009 for A.Y. 2002-03, 03-04 04-05, order dated 21.09.2012, confirmed the addition @ 12.5% on bogus purchase, wherein also the bogus purchases were from M/s. Shiv Metal Corporation of ₹ 4,10,165/-, the same logic may be applied in case of assessee. Therefore, same may be allowed as business expenses. At the outset, ld. Sr. D.R. supported the order of the CIT(A) and argued that assessee s income had been inflated to the extent of the bogus purchase and resultantly, the assessee had reduced the tax liability on it. He relied upon in case of ITO vs. Shri Gumanmal Misrimal in ITA Nos. 2536 2537/Ahd/2008 for A.Y. 2003-04 04-05, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on/M/s Hindustan Metal Corporation and both the parties admitted that they did not sell any material to the assessee and instead issued accommodation bills. In the face of this admission, the assessee miserably failed to establish the genuineness of purchases. The ld. CIT(A) found that the assessee had furnished quantitative tally of materials purchased and materials sold while the payments had been made by cheque from explained funds of the business. These findings have not been disputed before us by the Revenue. The ld. CIT(A) further observed that the materials were purchased from the open market incurring cash payment and bills have been taken from the aforesaid two parties. In the process, the assessee violated the provisions of sec. 40A(3) which prohibits cash purchases and there could be accompanying gain as the purchases were made from unregistered parties who do not pay sales tax and other statutory duties . Accordingly, the ld. CIT(A) while referring to a number of decisions of the ITAT relied upon on behalf of the assessee concluded that 30% of the purchase cost will be a reasonable amount in this case to cover the gain of the assessee. Not an iota of evidence has been p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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