9911796707
TMI Blog2016 (7) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... esident) 1. This appeal filed by the assessee is directed against the order of the Commissioner of Income-tax (Appeals), Panchkula, dated December 19, 2012, relating to the assessment year 2009- 10. 2. In this appeal, the assessee has raised the following grounds : 1. That the worthy Commissioner of Income-tax (Appeals), Panchkula, has erred in confirming the addition of ₹ 3,07,95,467 on account of bogus purchases. 2. That the worthy Commissioner of Income-tax (Appeals) has failed to consider the fact that the sales having been accepted by the Commissioner of Income-tax (Appeals) and, as such, there was no justification in making the addition of bogus purchases. 3. That the Commissioner of Income-tax (Appeals) has failed to consider the fact that by disallowing the purchases, the gross profit rate comes to 83 per cent. which cannot be there in the assessee's business. 4. That the Commissioner of Income-tax (Appeals) has failed to give any finding on ground No. 1 taken before herewith regard to the fact that the Assessing Officer has exceeded the limit of assessing under the scheme of selection through CASS which he could not have and departed fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partners as it is the practice of the assessee's line of business. Shri Sudhir Sehgal pointed out that the purchases from the parties mentioned in annexure A annexed to the assessment order were made from them through brokers who used to deliver goods and receive payments on behalf of the parties as is the practice in this line of business. It is also claimed that due to keen competition in this line of business, the parties supply the goods at the shops of the purchasers and also collect money from them itself. Thus, the assessee is not supposed to know the said sources especially when the payments have been made after delivery of goods and no advance payments have been made. The learned counsel for the assessee vehemently argued that there was no justification in doubting the purchases because in the absence of the purchases, how the sales could be made. He further contended that if the purchases are to be excluded, as proposed, corresponding sales are also to be decreased, which will mean no effect on the gross profit worked out in the trading account, if redrafted. Shri Sudhir Sehgal, the learned counsel for the assessee, also submitted that as per the Assessing Officer&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability on account of the purchases. He, accordingly, submitted that the sums credited on account of alleged purchases in the assessee's books of account created thereunder liability in the form of sundry creditors have been rightly treated as unexplained credit entries by the lower authorities. He, therefore, submitted that the impugned addition may be upheld. 8. We have heard the rival submissions and have perused the materials available on record. The perusal of the profit and loss account of the assessee shows the details as under : Trading account for the year ended 31 March, 2009 Particulars SCH Total Particulars SCH Total Opening stock 24,35,565 By sales Sales 4,03,34,375 Purchase 4,01,86,954 By closing stock 50,03,757 Less profit 27,15,613 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s accepted, which, in our opinion, is not possible in the assessee's line of business. At this stage, we may refer to the decision of the Income- tax Appellate Tribunal, Delhi Bench, in the case of Piyush Developers P. Ltd. v. Asst. CIT (supra) relied on by Shri Sudhir Sehgal, learned counsel for the assessee, wherein the Assessing Officer made the addition of ₹ 2,89,34,711. The purchases from three parties were held to be bogus and non-genuine. On appeal, the Commissioner of Income-tax (Appeals) held that if these purchases are disallowed, the gross profit margin would jump to 68 per cent., which is abnormal in this line of business. However, the Commissioner of Income-tax (Appeals) estimated the gross profit of the assessee at 27 per cent. as against 68 per cent. worked out by the Assessing Officer. The Revenue challenged the order of the Commissioner of Income-tax (Appeals) before the Tribunal and the Tribunal, vide its order dated July 8, 2015, in ITA No. 5599/Del/2010 relating to the assessment year 2008-09 held as under : 14.1 No defects have been found in the stock register nor any defects have been pointed out by the Assessing Officer in the audited books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f copies of bills, purchase vouchers, material receipt notes, as well as the copies of bank statement of the assessee-company evidencing the payment made to the said parties, which have been cleared from the account of the assessee. In few cases copies of gross receipts along with evidence of weighment of goods from dharm kanta have been filed by the assessee. It is also an undisputed fact that the invoices issued by the various parties are bearing the truck number of the vehicle used for delivery of goods and VAT has also been charged by the parties in their bills. The goods mentioned in the bills are mainly cement and steel (TMT bars) which are the basic component required for construct ion of any building or complex. The evidence of receipt of such goods by the assessee in the form of purchase voucher/material receipt note is also there. Most impor tantly as stated by the authorised representative all the payments made to the parties have been made by account payee cheques and the same have been cleared from the assessee's bank account. The learned authorised representative has also brought my attention to the fact that the assessee is maintaining item-wise stock register co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) The hon'ble Calcutta High Court in Diagnostics v. CIT reported in [2011] 334 ITR 111 (Cal) ; [2012] 20 taxmann.com 692 (Cal) at paragraphs 9 and 10 held as follows (page 114 of 334 ITR) : 'However, as regards the payments made to M/s. Selvas Photographics are concerned amounting to ₹ 3,12,302 we find that those have been made by account payee cheques and those have been encashed through the bankers of M/s. Selvas Photographics. It appears that, according to the appellant, at the time of assessment, the appellant had no business transaction with M/s. Selvas Photo graphics and, consequently, the said party did not co-operate with the Assessing Officer. However, the transaction having taken place through account payee cheques, we are unable to accept the contention of Mr. Agarwal, the learned advocate appearing for the Revenue that the transaction was a non-existent one. If an assessee took care to purchase materials for his business by way of account payee cheques from a third party and, subsequently, three years after the purchase, the said third party does not appear before the Assessing Officer pursuant to the notice or even has stopped the business, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Having come to such a conclusion, however, the Tribunal was of the opinion that the purchases may have been made from bogus parties, nevertheless, the purchases themselves were not bogus. The Tribunal adverted to the facts and data on record and came to the conclusion that the entire quantity of opening stock, purchases and the quantity manufactured during the year under consideration were sold by the assessee. Therefore, the purchases of the entire 1,02,514 metres of cloth were sold during the year under consideration. The Tribunal, therefore, accepted the assessee's contention that the finished goods were purchased by the assessee, may be not from the parties shown in the accounts, but from other sources. In that view of the matter, the Tribunal was of the opinion that not the entire amount, but the profit margin embedded in such amount would be subjected to tax. The Tribunal relied on its earlier decision in the case of Sanket Steel Traders and also made reference to the Tribunal's decision in the case of Vijay Proteins Ltd. v. Asst. CIT [1996] 58 ITD 428 (Ahd). We are of the opinion that the Tribunal committed no error. Whether the purchases themselves were bog ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
