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TMI Blog2012 (9) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment framed by the AO u/s 147 of the Act without providing copy of reason recorded is not valid under law. 3. The ld. CIT(A) erred in fact and in law in confirming the action of the AO in reopening the assessment based on the documents/papers/affidavits of third parties not relevant in the case of the appellant and without providing copies of the same to the appellant for giving necessary clarification. 4. The ld. CIT(A) erred in fact and in law in confirming the action of the AO in making addition to the income of the appellant without providing the copies of the documents/papers/affidavits referred to in the assessment order before making the addition. 5. The ld. CIT(A) erred in fact and in law in confirming the action of the AO in making the addition without giving proper opportunity of being heard in the matter. 6. The ld. CIT(A) erred in fact and in law in confirming the action of the AO in disallowing purchases of ₹ 4,10,165/- on the ground that the said purchases are bogus purchase despite of the fact that the appellant consumed the material in question. 7. The ld. CIT(A) erred in fact and in law in confirming the action of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s, Fluid Air Filter System, Ahmedabad. M/s. Fluid Air Filter System has confirmed receipt of material. The material was transported to Ahmedabad through M/s. R.K. Carting Service as can be seen by the transport challans. After processing, the said material was delivered to GACL. In view of the above, as per the learned Authorized Representative, it can be concluded the purchases made by the appellant are genuine. Further the payments were made through account payee cheques and the said parties issued valid bills. M/s. Shiv Metal Corporation possesses valid sales tax number. The appellant has used the material for his business purpose. The consumption of material is not doubted by the Assessing Officer. There is no finding that cash has been received. Reliance was placed by the Authorized Representative on the decision of Sagar Bose Vs. ITO 56 ITD 561 (CaL) and the - CIT Vs. M.K. Brothers 163 ITR 249 (Guj). I have considered the assessment order and the submissions of the Authorized Representative. The basic issue is that the appellant claims to have made purchases from a person who states that no sales have been made by him. No evidence has been adduced by the appellant to show th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enches on a similar issue. (i) ACIT Central Circle 1(4) v. Mardia Copper Extrusion Pvt. Ltd in ITA NO.4290/Ahd/1995 - AY 1992-93: After taking into account the rival submissions and also the reasoning of the CIT (A), the Bench had observed thus: 32. It only remains for us to consider, the rather unusual observation, if we may say so with respect, of the CIT (A) that if it is found that Mahakali Roadlines have not transported the goods, then they might have been transported by some other transporter and the only thing which the AO can do is to disallow the transport charges but not the purchases. We are totally unable to understand or appreciate the logic of the observation. If the claim of transportation of the goods is found to be bogus or not genuine, the logical result would not only be that the transportation charges should be disallowed but since the fact that the goods were transported itself stands disproved or unproved, the purchases also stand unproved. It is not proper for the CIT (A) to give the benefit of doubt to the assessee, by observing that the goods might have been transported by some other transporter. Even the assessee has no case that the goods were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, purchase rate as mentioned in the alleged sales bill cannot be accepted. Any person indulging in the practice of purchasing goods from the grey market and obtaining bogus bills of some other parties, would do so for getting some benefit. But what would be the magnitude of the benefit would depend upon facts of each case. In the case of Vijay Proteins, ITAT held that such benefit to be 25% and therefore sustained the disallowance for bogus purchase at 25%. In the case of Sun Steel (supra), the ITAT deemed it fit to sustain the disallowance for a lump-sum amount of ₹ 50000/-. However, we find that in the case of Shri Anubhai Shivlal (supra), the ITAT has considered both the decisions in the case of Vijay Proteins and Sun Steel (supra) and thereafter sustained the disallowance at 12.5%. Relevant findings of the ITAT in the case of Anubhai Shivlal read as under: '3.At the time of hearing before us, it is submitted by the learned counsel that the addition sustained is excessive. In support of this contention he referred to the decision of the Tribunal in the case of ITO v. Sun Steel 92 TTJ (Ahd) 1126 wherein the Tribunal has sustained the addition of ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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