9911796707
TMI Blog2017 (10) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... ind it further strange that assessee wants the Revenue to produce assessee's own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence the Revenue authorities cannot put upon blinkers and accept these purchases as genuine. In the present case, the assessee wants that the unassailable fact that the suppliers are non-existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... Profit was 0.96 %. Considering that tax is payable on the Net Profit, appellant pleads that disallowance was needed to have been restricted to the Net Profit @ 0.96 %. 4. The order under appeal is not only bad in law and invalid, but also against the principals of natural law of equity and justice. 4. In this case, the assessee filed return of income for A.Y. 2011-12 on 29/09/2011 declaring total income of ₹ 19,21,254/-. The return was processed u/s 143(1). The case was selected for scrutiny assessment under CASS. Notices u/s 143(2) &142(1) were issued and served on the assessee. The assessee is a proprietor engaged in metals and alloys carrying business as wholesaler under the name and style M/s. Kushal Metal & Steel industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformed the action of the assessing officer in making addition of 12.5% of the bogus purchase. The ld. CIT(A) held as under: 5.2 I have perused the assessment order, submissions of appellant, and the facts and circumstance of the case. On careful examination of the same, I observe that under Income Tax Act, 1961 what can be taxed is the real income. Even though the transaction is not verifiable, what is taxable is the income component, and not the entire transaction amount. I find that in many such cases, the additions are made based on the G.P./ N.P. ratio. In such a situation, even assuming that the appellant would have purchased the goods by investing the unaccounted cash, still it is undisputed that the sale proceeds of said goods hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases were not bogus but were made from the parties other than those mentioned in the books of account. That being the position, not the entire purchase price but only the profit element embedded in such purchases could be added to the income of the assessee. In essence, the Tribunal only estimated the possible profit out of purchases made through non-genuine parties. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick could be adopted. Following the Gujarat High Court in the cases of Commissioner of Income Tax-I Vs Simit P Sheth ,356 ITR 451 and M/s Bholenath Poly Fab Pvt. Ltd. Vs AO, 355 ITR 290, where disallownces were made on GP/NP on percentage basis, and more parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of the goods was also not on record. In this factual scenario it is amply clear that assessee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the providers of these bills are bogus and non-existent. 9. The Sales Tax Department in its enquiry have found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unals restriction of the addition to 25% of the bogus purchases was set aside. It was expounded that when purchase bills have been found to be bogus 100% disallowance was required. The special leave petition against this order alongwith others has been dismissed by the Hon'ble Apex Court vide order dt 16.1 2017. 13. We further note that honble Rajasthan high court has similarly taken note of decisions of the apex court on the issue of bogus purchases in the case of CIT Jaipur vs Shruti Gems in ITA No. 658 of 2009. The Hon'ble High Court has referred to the decision of CIT Jaipur vs. Aditya Gems, D. B. in ITA No. 234 of 2008 dated 02.11.2016, wherein the Hon'ble Court had inter alia held as under: "Considering the law declared by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
