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TMI Blog2017 (9) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... us invoices from the said party namely Nutan Metals. The consumption/utilization of the material reflected by the said bogus invoices stood proved while the GP already declared is 31.91% which included these alleged purchases, which has already suffered tax. End of justice in this case will be best served in this if addition is sustained to the tune of 6% of the purchases to the tune of ₹ 56,55,569 so made from Nutan Metals, which will lead to confirmation/upholding of addition to the tune of ₹ 3,39,334/- - I.T.A. No. 5864-5865/Mum/2016 - - - Dated:- 17-8-2017 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : None For The Revenue : Sh. V Vidhyadhar ORDER PER RAMIT KOCHAR, Accountant Member These two appeal, filed by the assessee, being ITA No. 5864- 5865/Mum/2016, are directed against two separate appellate orders both dated 16th June, 2016 passed by learned Commissioner of Income Tax (Appeals)- 3, Mumbai (hereinafter called the CIT(A) ), for assessment year 2011-12 and 2012-13 respectively, appellate proceedings before learned CIT(A) arising from separate assessment orders dated 05-03-2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f purchases and sale of the party was enclosed. However, the assessee despite being asked to produce the said party did not produce the said party before the AO nor said party Nutan Metals replied to notice u/s 133(6) issued by the AO. The AO observed that the said party Nutan Metals has admitted before the Sales Tax Department that they have not made any sale or purchase transaction but rather only bogus invoices were issued, which proves that purchases shown to be made from Nutan Metals is bogus. It was observed by the AO that keeping in view factual matrix of the case, it is clear that the assessee made purchases from grey market to tally stock as the assessee was in possession of stock while bogus bills were obtained from Nutan Metals. Thus, the assessee benefited by way of margin of grey market. The books of accounts were rejected and the AO estimated GP of 31.91% on these alleged bogus purchases to the tune of ₹ 56,55,569/- from Nutan Metal and income of ₹ 18,04,692/- was brought to tax by the AO vide assessment order dated 05-03-2015 passed by the AO u/s 144 r.w.s. 147 of the 1961 Act. 4. Aggrieved by the assessment order dated 05-3-2015 passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumption of the material so reflected in alleged purchases from Nutan Metals for manufacturing of finished goods stood proved which is not controverted by Revenue. However, the assessee despite being asked to produce the said party Nutan Metals did not produce the said party before the AO nor notices u/s 133(6) of the 1961 Act was complied with. The AO observed that the said party has admitted before the Sales Tax Department that they have not made any sale or purchase transaction which proves that purchases shown to be made from Nutan Metals is bogus. It was observed by the AO that keeping in view factual matrix of the case, it is clear that the assessee made purchases from grey market to tally stock as the assessee was in possession of stock while bogus bills were obtained from Nutan Metals. Thus, the assessee benefited by way of margin of grey market. The books of accounts were rejected u/s 145(3) and the AO estimated GP of 31.91% on these alleged bogus purchases from Nutan Metal to the tune of ₹ 56,55,569/- and income of ₹ 18,04,692/- was brought to tax by the AO vide assessment order dated 05-03-2015 passed by the AO u/s 144 r.w.s. 147 of the 1961 Act which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f to the assessee and reduced the Gross Profit rate to 30 per cent. 9. The counsel for the assessee has submitted before us that the income- tax authorities wrongly rejected. 10. In our opinion, whether there were bogus purchases or not, is a finding of fact, and we cannot interfere with the same in this appeal. As regards the rejection of the books of account, cogent reasons have been given by the income-tax authorities for doing so, and we see no reason to take a different view. 11. It is well-settled that in a best judgment assessment, there is always a certain degree of guess work. No doubt the authorities concerned should try to make an honest and fair accounts. In our opinion, there was no arbitrariness in the present case on the part of the income-tax authorities. Thus, there is no force in this appeal, and it is dismissed accordingly. No costs. Thus, as can be seen that the assessee has duly proved that the said material was duly recorded in stock records and utilization/consumption of the said material for manufacturing finished goods stood proved which remained uncontroverted by Revenue even by learned DR before us. But on the other side, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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