9911796707
TMI Blog2017 (2) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... . These facts clearly establish that the assessee has concealed particulars of in income, therefore, in view of the above mentioned facts and findings, we disincline to interfere in the findings of the Ld. CIT(A). - Decided against assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... 29th September200 7 that the assessee company has been closed since last more than five years and their bank has served them securitization notice and has taken over the procession of their premises. It was further stated by the assessee in that letter that since the banker has taken over the procession of their premises so they have no record available with them. The assessee officer had disallowed the claim of bogus purchases to the tune of ₹ 184,36,443/-. The relevant observation of the assessing officer during the course of assessment proceedings are reproduced as under:- "5. In the case of the appellant company, the Commissioner of Central Excise & Customs, Vadodara-II had conducted inquiry and it was revealed that the assessee company had claimed CENVAT credit of ₹ 50,31, 380/- on purchases from one M/s. J.K. Enterprises, Baroda. Investigation further revealed that the purchase claim made .by the assessee was bogus. The amount of purchases from M/s. J.K. Enterprises Baroda during the year under consideration is ₹ 1,84,36,443/-. Thereafter the Commissioner of Central Excise & Customs, Vadodara-II vide his order No. F.No.V.Ch. 39(15)15/OA/AC/Prev./03 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /auto rikshaw which were not capable of carrying the goods which were claimed to have been transported. (ii) Statement dated 1-12-2000 of Shri Himatlal Jagjivandas Gandhi owner of Truck No. GTB 6798, statement dated 4-12-2000 of Shri Natvarbhai Jagjivandas Gandhi, owner of Truck No. GTB 6128, statement dated 5-12-2000 of Shri Bakulbhai Lalubhai Baria, owner of Tata Tempo No. GJ 6 T 3824 and letter dated 4-12-2000 and 7- 12-2000 received from M/s. Bhoomi Cargo Movers, Harni, Vadodara wherein they have stated that they have never transported any goods from the premises of JKE to Ibkey, Jambusar. (iv) Statement dated 2-1-2001 of Shri Keval V Trivedi recorded under section 14 of the Central Excise Act, 1944 wherein on being confronted with the above mentioned wherein on being confronted with the above mentioned RTO's letter and the statements of owners of various trucks he stated that Ibkey had not received any goods under the 71 invoices issued by JKE as detailed in Annexure-1 to his statements that no material had been dispatched from the godown of JKE to their factory at Village-Ankhi and as such they had not received any material that arrangement had been made merely to pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the AY 2001-02 is not genuine, and accordingly the total income of the assessee company for the A.Y. 2001-02 is computed on the basis of the material available on record which are discussed as under: 8. Disallowance of bogus purchases- During the course of assessment proceedings, it is noticed from the Profit and Loss account that the assessee has claimed purchases of ₹ 3,19,55,308/- of raw material and carried forward closing stock of Rs. I,84,20f574/- under the head inventories. The assessee was specifically requested to furnish vide notice u/s 142(1) at point No.3(c) to furnish the details of purchases claimed in the profit and loss account. As mentioned above the assessee company has been afforded sufficient opportunity to furnish the details/information, but it has failed to furnish any detail as called for till date. In absence of any reply from the assessee, the purchases claimed under the head Inventories at ₹ 1,84,20,574/- by the assessee remain unverifiable. Hence the purchases as claimed by the assessee during the year under consideration are a/so not verifiable in the absence of any submission of the assessee. In view of the above facts, it is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mated at ₹ 9,49,577/-. The Honourable Commissioner of Income Tax (Appeals) of the view that past results of the company cannot provide any indicator for adopting a net profit rate and he therefore proceeded to estimate the income at ₹ 9,49,577/-. It would be pertinent to state here that even after the additions confirmed by the Honourable CIT (Appeals) the income in the case of the company would be Re. Nil after carry forward of unabsorbed losses and depreciation (refer to the application u/s 154 dated 17.3.2011, copy of which is enclosed herewith). Considering the fact that there is no income in the case of the company or the assessed income would be Nil it is submitted that penalty u/s 271(1)(c) be not levied. Without prejudice to the above it is submitted that penalty proceedings are separate from assessment proceedings and the findings in the assessment proceedings cannot be made a basis for levy of penalty. It may be submitted that there is no iota of evidence in the possession of the department to establish, that the company had effected turnover of ₹ 1,89,91,523/-. The mere fact that certain book entries were made by the company it cannot be said that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1,84,36,443/- and ₹ 48,87,444/-. Concerted investigation made by the excise authority covering all aspects of the said purchases led to fraudulent claim of CENVAT to the tune of ₹ 50 lacs by the appellant and the same also revealed that the purchases were bogus and the appellant company with the help of fake documents relating to the purchases had availed of CENVAT credit. As regards income to implication, it can be seen that the appellant had reflected the purchases in the accounts for the year ended 31-03-2001 claiming the said bogus purchases to the tune of ₹ 1,84,36,443/-. Based on this fact, case of the appellant was reopened by the AO u/s 147 of the IT Act. Now the plea of the appellant's AR as made in the submission dated 28-06-2013 as reproduced in earlier paragraphs .of this appeal order is that merely because the addition has been confirmed by the CIT(A) on estimated basis cannot be a basis for levy of penalty. In support of this plea, the AR of the appellant has relied upon decisions of various Hon'ble Courts. But in the fact and circumstances of the case of the appellant it cannot be said that it is a mere case of confirming the addition on e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efits, the processing expenses and the other entries in the accounts were totally unreliable and in such a scenario, the Ld. CIT(A) was left with no option , but to estimate the income of the appellant for the year under consideration. The appellant had shown sales in the trading account whereas apparently there was no raw-material to process or to manufacture. There was no corresponding purchases and thus, all the expenses were appearing to be bogus. As per the Ld. CIT(A) the second scenario was that there was undisclosed purchases which were processed and shown during the year. As per the Ld. CIT(A) considering the background of the appellant that it had indulged in malpractices such as incorporating bogus purchases in the account to pass on CENVAT benefits, the processing expenses and the other entries in the accounts of the appellant were totally unreliable. As per the Ld. CIT(A) under such scenario one had to estimate the income of the appellant for the instant assessment year. These facts show that the book result i.e. the profit for the year under consideration was not correctly disclosed by the appellant as its books of accounts was not reliable at all. Thus, it can be said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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