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TMI Blog2018 (2) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance to the extent of 2% of alleged bogus purchases. - Decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount were just entries which the assessee company had procured from the respective parties after providing equivalent amount of cash to them. The A.O observed that the assessee during the course of the survey proceedings had admitted of having booked bogus purchases in order to meet out certain expenditure which were incurred for smooth running of business, but however, the same did not qualify for the claim of deduction as a business expenditure under the provisions of the Income Tax Act. The A.O observed that the assessee on the basis of his aforesaid revelations had came up with an offer of additional income of ₹ 6,50,00,000/- for A.Ys 2010-11, 2011-12 and 2013-14. However, on a subsequent date i.e. 27.12.2012 Sh. Sunil G. Mathreja by way of a sworn affidavit retracted his earlier statement recorded in the course of the survey proceedings on 07th/08th June, 2012. 4. That during the course of the assessment proceedings the A.O on the basis of the information received from the Sales Tax Department that the assessee had made bogus purchases from the following parties :- Party Name Amount Shyam Traders 14,35,965/- Sandesh Sales P. Ltd. 8,59,242/- Mani Bhadra Sales P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove purchases been bogus. The assessee in order to drive home the genuineness of the purchase transactions under consideration, submitted that the payments were released to the assessee by the Government and MMRDA etc. after detailed inspections of the roads constructed by it, which thus irrefutably proved that the materials purchased had been consumed in the execution of the contract works of construction of roads by the assessee. The assessee taking support of the fact that the payment of the purchase consideration to the aforementioned supplier parties was made vide account payee cheques, thus, tried to fortify its claim as regards the veracity of the purchase transactions under consideration. The assessee further in order to dispel the doubts raised by the A.O as regards the genuineness of the aforementioned parties, submitted that all of the said parties were registered under the Sales Tax and VAT, which fact could safely be gathered on a perusal of their respective invoices. However, the A.O was not persuaded to accept the genuineness of the purchases claimed by the assessee to have been made from the aforementioned parties, for certain reasons, viz. (i) the assessee had fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved, the assessee carried the matter in appeal before the CIT(A). That before the CIT(A) the assessee furnished copy of stock register along with the details of consumption of the material purchased, details of opening work in progress, closing work in progress, stock statement as on 31.03.2008 and 31.03.2009 and the consumption formula required as per the Government books. The CIT(A) after deliberating on the material placed on record by the assessee, observed that the assesses own case for A.Y. 2010-11 involving identical facts was adjudicated by the Tribunal in ITA No. 2269/Mum/2015. The CIT(A) observed that the Tribunal while disposing of the aforesaid appeal of the assessee had after considering at length the material placed on record concluded that now when the assessee had proved the consumption of the material in the course of the execution of contracts for construction of roads for Government and MMRDA, which were subject to strict inspection on the part of the said authorities, therefore, there remained no occasion for disallowing the entire amount of purchases claimed by the assessee to have been made from the aforementioned parties. The CIT(A) observed that the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can safely be concluded that the purchases claimed by the assesses to have been made from the aforementioned parties were utilized by the assessee for the construction of the roads carried out by the assessee in the course of the execution of its contract works. We find that a coordinate bench of the Tribunal while disposing of the appeal in the assesse's own case for A.Y 2010-11, wherein identical facts and issue were there before the Tribunal, had restricted the disallowance to the extent of 2% of alleged bogus purchases by observing as under : "14. Now, coming to the disallowance of purchases of ₹ 4,86,22,753/-, we found that these suppliers were found to be non-genuine by the sales tax department, even though it was contention of ld. A.R that suppliers were registered with VAT where stringent process of followed for issuing VAT registration like photo, verification of address (residential and office), ration card and proof of residence, However, we found that not only as per the sales tax department but also as per the enquiry made by the A.O. these suppliers were not found at the given address. However, at the very same time, we cannot ignore the actual purchases made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of eastern express highway to the assessee. The certificate so issued by the Mumbai Metropolitan Region Development Authority also certified that they have been supervising the work regularly and taking the samples of material and testing the same at Government and private laboratories as prescribed by MMRDA. The material so purchased and consumed was found to be correct as per the tender specifications and as required by the DSR prescribed by PWD Maharashtra Government. Relevant certificates are placed at page 142 & 143 of the paper book. Thus, the assessee had proved that roads have been constructed and materials are used by the assessee without which road could not have been constructed. All the above details were filed with the AO alongwith the latter dated 05.02.2013. The statement of quantitative purchases yearly, monthly and date wise is placed at page1 to 37 of the paper book. Consumption required details as per formula from State Government is placed at page 38 of the paper book. Yearly and month wise and bill wise sales details with consumption are placed at page 69 of the paper book. Details of closing work in progress as on 31.03.2009 and 31.03.2010 are placed at pag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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