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TMI Blog2015 (1) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... l was justified in law in sustaining the disallowance to the tune of Rs. 27,02,752/- being 25% of the purchase price shown as per invoices in the name of 33 bogus parties amounting to Rs. 88,03,614/- plus freight expenditure of Rs. 5,02,752/-, i.e. out of aggregate disallowance of Rs. 93,06,366/- made by the Assessing Officer and confirmed by the CIT(A) which is inclusive of the sum of Rs. 17,99,788.75 being the peak credit as well as the closing balance shown as outstanding in the names of such bogus suppliers? (3) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the assessee's alternative claim (in spite of assessee's purchases) to the extent of 7Rs.88,03,614/- having been made outstide assessee's books of account constituted exceptions for purposes of Rule 6 DD(j) and were not hit by Sec.40A(3)?" 2. Whereas, Tax Appeal No.243/2002 was admitted on 13.08.2002 the following substantial question of law; "Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in law in confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of concealed income and vide order dated 26.08.1996, the A.O imposed the minimum penalty of Rs. 29,51,174/-. Against the order dated 26.08.1996, appeal was preferred before the CIT(A). The CIT(A) dismissed the appeal vide order dated 08.03.1999. Being aggrieved by the order of both the authorities, the assessee filed appeal bearing ITA No.207/RJT/1999 before the Tribunal. However, the Tribunal dismissed the appeal filed by the assessee, vide judgment and order dated 27.02.2002. Hence, the Tax Appeal. 9. Mr. SN Soparkar learned Senior Counsel appearing for the assessee submitted that the Tribunal has seriously erred in passing the impugned judgment. He submitted that in a similar case in Commissioner of Income-tax II v. Gujarat Ambuja Export Ltd., [2014] 43 taxmann.com 244 (Gujarat) this Court reduced the addition to 5% of the amount in question. In that case, the purchases were found to be genuine, however, the CIT(A) taxed 25% of the amount relying on another decision of this Court in the case of Sanjay Oilcake Industries v. CIT, [2009] 316 ITR 274 (Guj) which was reduced by the Tribunal to 5% of the amount. He, therefore, submitted that the Tribunal has committed ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment made by way of cheques is Rs. 93,06,366/-. However, the Tribunal lost sight of the aforesaid fact and proceeded to dismiss the appeal of the assessee, which is erroneous in law and also on facts. He, therefore, submitted that the impugned judgment of the Tribunal deserves to be quashed and set aside. 10. In respect of T.A. No.243/2002, learned Senior Counsel Mr. Soparkar submitted that the Tribunal has erred in upholding the penalty levied u/s.271(1)(c) of the Act inasmuch as the additions were made on mere presumption and not on the basis of any material fact not disclosed by the assessee. It was, therefore, submitted that the penalty imposed u/s.271(1)(c) of the Act deserves to be quashed and set aside. He has placed reliance upon a decision of this Court passed in Tax Appeals No.461/2000 & allied matters decided on 05.11.2014. 11. Mr. Pranav Desai learned Standing Counsel appearing for the Revenue supported the impugned judgment of the Tribunal and submitted that the Tribunal has passed the judgment by relying upon its own judgment rendered in the case of Hynoup Food and Oil Ind. P. Ltd. v. CIT. However, the said judgment of the Tribunal was challenged in appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Rule 6DD(j) or not will depend on the peculiar facts and circumstances of each case. In the present case, for reasons recorded herein above, the provisions of Section 40A(3) would not be applicable and even if they are held to be applicable, the expenditure would be covered by the exceptions provided in Rule 6DD(j) of the Rules. 16. It is a matter of fact that the goods were not received from the parties from whom it is shown to have been purchased but, such material was received from a different source which is exclusively within the knowledge of the assessee and none else. Therefore, it is evident that the assessee had inflated the expenditure in question by showing higher amount of purchase price through the fictitious invoices in the names of 33 bogus suppliers. Considering the overall factual scenario, the Tribunal was justified in disallowing 25% of the purchase price. 17. All the three questions referred to us are based on facts and accordingly, they are answered in favour of the Revenue and against the assessee in view of the discussion made herein above. 18. Insofar as T.A. No.243/2002 is concerned, the question of law raised therein is already concluded by a decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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