9911796707
TMI Blog2017 (9) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) is erred in holding that the suppressed profit on account of bogus transaction was to be estimated at 12.5% of the net purchases ignoring the fact that the assessee was a manufacture who consumes the purchases made by it in the course of its business; that one to one co-relation between item of purchase and sale cannot be established in such case; and therefore, the total income arrived on the basis of estimation of profit attributable to such bogus purchase is not valid in such cases. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the ITO-9(1 )(4) be restored." 3. The brief facts of the case are that the assessee company is engaged in the business of manufacturing and selling of pavar blocks and tiles. The return of income was e-filed by the assessee u/s 139 on 23.11.2010 declaring total income at Rs. 24,60,664/- , which was processed by Revenue u/s 143(1) of the Act. Subsequently the case of the assessee was selected for framing scrutiny assessment by issue of notice u/s 143(2) of the Act dated 25.08.2011 by the AO and assessment was framed by the AO u/s 143(3) , vide assessment order dated 25-11-2011 , wherein the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shtra sales tax department has also declared above parties as Hawala traders. The TINs allotted to these parties have also been cancelled by the Sales tax department. 4. Further, an information has been received from the office of the DGIT vide letter dated No. Corr. Field/DGIT (Inv) dt. 26.12.2013 stating that M/s AUTOMATIC TILES AND MARBLE INDUSTRIES PVT LTD has made bogus purchase through above parties. It is further intimated that Shri Tejas Shah of M/s Relcon Infra Project Ltd has admitted in the statement recorded by DDIT to have entered into bogus transaction with above concerns. The parties also failed to produce any supporting evidence to prove the purchase transactions. 5. From the above facts, it is clear that the assessee has booked bogus purchases in its books of account to the tune of Rs. 47,17,888/- and has failed to disclose fully and truly all material facts in respect of these purchases necessary for its assessment for the A. Y. 2009-10. In view of the above, I have reasons to believe that an income of Rs. 47,17,888/- has escaped assessment for the assessment year 2009-10. Notice u/ s. 148 issued after obtaining approval of Addl.CIT, Rg-8(l), Mumbai on 03.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnish any details/confirmations or whereabouts of the aforesaid parties. The assessee although submitted its bank statement and submitted that the payments have been made by account payee cheques against purchases made from these parties. The details of purchases made from these parties were submitted by the assessee before the AO. The enquiries with banks revealed that there were dealing of these hawala dealers with other bogus hawala dealers and cheques deposited were encashed regularly in cash immediately after encashments. The assessee was confronted with the same. The assessee submitted copies of purchase bills, delivery challans and copy of stock register before the A.O. and complete statement of stock summary with respect to the parties from whom these purchases were made. The assessee also submitted quantitative stock statement of the items dealt with these four parties namely sand, powder and metal, were also submitted which contained details of name of party, item and quantity etc. . From the quantitative stock statements , some quantitative differences were noticed by the A.O. . The AO also observed that lorry receipts were not produced. The AO observed that delivery cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted the contention of the assessee and held that the assessee could not substantiate its claim of purchases from the aforesaid parties with the help of books of accounts, the stock statements are not tallying, the bills issued by these parties are not proper, the assessee could not substantiate details of use and yield of such material , there is no mentioning of maintenance of stock records as per tax audit report , GP ratio has fallen from 27% to 23%, NP ratio has fallen from 3% to 1% and the assessee could not controvert the statements made by these parties before MVAT authorities and also could not produce the parties before the AO, and accordingly the A.O. made the addition of Rs. 47,17,888/- as the purchases were found to be not genuine, vide assessment order dated 26-03-2015 passed by the AO u/s 143(3) r.w.s. 147 of the 1961 Act. 4. Aggrieved by the assessment order dated 26-3-2015 passed by the A.O. u/s 143(3) r.w.s. 147 of the 1961 Act, the assessee carried the matter in appeal before the ld. CIT(A). 5. Before the ld. CIT(A) , the assessee submitted that the assessee is in the business of manufacturing solid cement concrete blocks of various shapes and thickness and raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of the assessee and these dealers have confessed before MVAT authorities that they were engaged in issuing bogus bills without supplying material physically, and the assessee could not produce these parties before Revenue. The learned CIT(A) observed that the A.O. has not doubted the genuineness of the sales as well consumption/sales, the motive behind obtaining bills from these parties appears to be inflation of purchase prices so as to suppress true profits. The ld. CIT(A) observed that the suppressed profit embedded in purchases which the assessee would have made from these bogus dealers need to be brought to tax. The ld. CIT(A) after considering the facts of the case, estimated the suppressed profit to the extent of 12.5% of the purchases made from these bogus parties, vide appellate order dated 30-11-2016. 6. Aggrieved by the appellate order dated 30-11-2016 passed by the ld. CIT(A), the Revenue is in appeal before the Tribunal. 7.The ld. D.R. submitted that this is Revenue's appeal. The A.O. has made 100% disallowance of the purchases made from bogus parties while the ld. CIT(A) reduced the same to 12.5% of alleged bogus purchases on account of suppressed profits du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 27540616280V AAAPV4487A 2,752,535 26.06.2007 Manishi Traders 27260523120V AAIHP5622D 14,000 13,04,2006 Great International 27680504653V 1,940,537 23.12.2005 TOTAL 47,17,888 The said hawala dealers were engaged in issue of bogus bills without any supply of material as per their statements/affidavits filed by these bogus dealers before MVAT authorities. The assessee's case was reopened by the A.O. u/s 147 and notices u/s 148 of the Act was issued on 3rd March, 2014 , which was duly served upon the assessee , and the said reopening u/s 147 was within four years from the end of the assessment year. The reasons recorded were duly furnished to the assessee by the AO. During the course of assessment proceedings and appellate proceedings, the assessee explained the consumption/utilization of the raw materials so purchased from these alleged bogus dealers for production of finished goods. The assessee had produced the purchase bills and other relevant documents . It was also explained that the assessee had made the payments though banking channel by issue of account payee cheques. The assessee also explained GP ratio for A.Y. 2008-09 to A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly explained the consumption/utilization of material and the assessee is also maintaining excise record and is subject to excise scrutiny/audit. There was minor difference in the stock reconciliation submitted by the assessee before the AO which the assessee rectified before CIT(A) and explained the same due to clerical error/cut and paste errors. The ld. CIT(A) has also gone through the consumption patterns and no adverse comments have been made. It is also a fact that the assessee could not produce the parties before the authorities below as these parties are not traceable. The attempt made by the AO to trace these parties also did not yield results. The content of the statements/affidavits were brought to the notice of the assessee by the AO as is emerging from the assessment record and the contention of the assessee that it did not get chance to rebut the said statement cannot be accepted. The purchases are appearing in the books of the assessee and primary onus is on the assessee to prove that the purchases are genuine. The assessee has brought on record sufficient material to prove consumption/utilization of the said material which is not doubted by the learned CIT(A). The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndings of the Assessing Officer, but reduced the Gross Profit from 40 per cent to 35 per cent. 8. In further appeal, the Tribunal had given further relief 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 held that appellant has shown bogus purchases, and the books of account were 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 estimate of the income even in a best judgment assessment, and should not act totally arbitrarily, but there is necessarily some amount of guess work involved in a best judgment assessment, and it is the assessee himself who is to blame as he did not submit proper accounts. In our op ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
