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TMI Blog2016 (4) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... act is that during the course of search and survey proceedings in the case of Edible Oil Mill Group it was noticed that M/s. Vishal Traders, Dist. Kheda had issued bogus/adjustments bills to a larger number of concerns of Mehsana and Patan districts of Gujarat during financial year 2006-07 onwards. In his statement recorded u/s. 131 of the Act, the proprietor of Vishal Traders, Shri Dharmendra Pandya admitted that his firm was not in existence and the bills issued were bogus/adjustments bills only. 4. On perusal of the bank statements of Shri Dharmendra Pandya, it was noticed that there was a continuous pattern of deposit and immediate withdrawal of cash. 5. Pursuance to the aforementioned search operation, inquiries were made from the beneficiaries of such bogus/accommodation bills and the assessee before us is one of the beneficiaries. 6. The assessee was found to have made purchases from the following parties during the assessment year 2008-09. (i) M/s. Vishal Traders Rs. 2,67,00,202/- (ii) M/s. Patel Vipulkumar Bharatbhai ni Co. Rs. 2,29,67,780/- (iii) Patel Vaimilkumar Harshadbhai Rs. 10,31,915/- (iv) Kanaiyalal Prahladbhai Patel Rs. 2,96,052/- (v) URD Purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat Gramin Bank at Gandhinagar. Normally, I withdraw cash from Kotak Bank and deposit it in Dena Gramin Bank. Due to this, some time huge cash on hand was maintained with me. Also I purchase Raydo and Aranda from direct producer (farmers). As per the prevailing system, we have to make immediate payment against purchase of goods. Hence huge cash on hand is required to keep with us. The source of huge cash on hand is withdrawals made from the bank only. d. Your good self drawn conclusion that purchase made during the F. Y. 2007-08 & 2008-09 from M/s Patel Vipulkumar Bharatbhai ni Co. is not genuine only because bills contain same signature for a very long period. This is hypothesis and not the fact. The fact is materials were purchased from the party and payment is made to it and out of these purchases, sale of goods were made by me. e. From the above, it seems that your good self has drawn conclusion that no actual material was purchased by me and only purchase bills were taken from above party and my total purchase is bogus. Then how I have effected sale of goods to outsiders? If, for a while, presume that your hypothesis is correct then correspondingly my total sales is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation from same that whether actual goods were delivered or not. For a while, presumption of your good is believe to be true then how I made sale of finished product to others? As your good self know that I am running crushing unit, extract in the form of Oil and Cake is obtained from input raw materials like Kapasia and Raydo. Without any raw material (like Kapasia and Raydo) purchase, my sale is not possible. * I would like to brought to your good self's notice, some discrepancy in statement given by the proprietor or above firm on 9-7-2008, as under. a) In reply to question no. 4 & 5, he stated that business was handled by his brother in law Mr. Sanjaykumar M. Joshi and he has no idea of any business transaction. b) In reply to question no. 7, 8 & 9, he stated that he does not know any person as he has not done any dealing with the party. He has not invested any capital in the business and whether any books of accounts are maintained or not he does not know ? c) In reply to question no. 13 and 14, he confirm that he has not delivered any goods and issued only invoice. Both his reply mentioned above are contradictory itself and not require to believe as true. * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 11. Aggrieved by these two additions, the assessee carried the matter before the ld. CIT(A). 12. Before the ld. CIT(A), it was strongly objected that the A.O has grossly erred in treating the entire purchases as income of the assessee, it was submitted that most of the details called for by the A.O were filed during the assessment proceedings. The assessee also submitted the Sales Tax assessment order for the financial year 2007- 08, relevant to assessment year 2008-09 and strongly contended that all the sales and purchases have been treated as genuine by the Sales Tax authorities. 13. It was also brought to the notice of the ld. CIT(A) that sometimes the assessee is making purchases directly from the producers/agriculturists from whom purchase bills are not available. To regularize such purchases, the assessee procures accommodation bills and such accommodation bills may be bogus but the purchases are not at all bogus. After considering the facts and the submissions and after discussing and drawing support from the decision of the Tribunal in the case of N.K. Proteins Pvt. Ltd. 4 SOT 479, Vijay Proteins Ltd. 58 ITD 428 and also from the decision of the Hon'ble High Court of G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had categorically stated that he has made purchase of goods from direct producer and only invoices of these three party were taken to regularize the same and by doing so, the assessee was getting the benefit in purchase price of Rs. 4 to 5 per 20 kgs. It was further made very clear that it is not a case where materials were not actually purchased. 19. Thus, it can be seen that even the admission of the assessee related to the procurement of alleged bogus bills at no stage, the assessee admitted that there were no purchases. 20. However, at the same time, in our considered opinion and in our understanding of the facts the possibility of inflated purchases cannot be ruled out. 21. As the assessee himself as admitted in his submission that he is getting the benefit of Rs. 4 to 5 per 20 kgs., an addition of 8% should meet the ends of justice. 22. Modifying the findings of the ld. CIT(A), we direct the A.O to restrict the disallowance in respect of bogus purchases to 8% of Rs. 5,66,81,430/-. Thus the disallowance should be restricted to Rs. 45,34,515/-. Assessee gets a partial relief. 23. In so far as the addition of Rs. 61,05,000/- is concerned, in our considered opinion, the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed the addition on account of discrepancy in stock and made an addition of Rs. 4,90,282/-. Assessee carried the matter before the ld. CIT(A) but without any success. Before us, the ld. counsel for the assessee reiterated what has been stated during the course of the assessment proceedings. The ld. D.R. strongly supported the findings of the revenue authorities. We have given a thoughtful consideration to the orders of the authorities below. It is an undisputed fact that stock of Raydo was found to be short by 54,0007 kg. whereas stock of Raydo Khod was found to be in excess by 21,500 kg. It is also an admitted fact that the only basis for making the addition by the A.O is that the assessee admitted in his statement during the course of the survey operations. 30. However, in our considered opinion the explanation/reconciliation made by the assessee cannot be brushed aside lightly the A.O ought to have examined the reconciliation statement. We find that even the First Appellate Authority has not given any consideration to the reconciliation statement filed by the A.O. Therefore, in the interest of justice and fair play, we restore this issue to the files of the A.O, the A.O is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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