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TMI Blog2018 (2) TMI 1632X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri Neelkanth Khandelwal Advocate For The Revenue : Shri Rajesh Kumar Yadav Order under section 254(1) of Income-Tax Act PER PAWAN SINGH JUDICIAL MEMBER: 1. These are the appeals filed by the assessee against the order of ld. CIT(A)-28, Mumbai dated 4th April 2017 for A.Y.2009-10, 2010-11 and 2011-12 in the matter of order passed u/s.143(3) r.w.s. 147 of the IT Act. In all appeals the assessee has raised identical grounds of appeal except variation of figure of additions of 25% of bogus purchases and 1% commission on such purchases. All appeals were heard together and are decided by consolidated order for the sake of convenience. For appreciations of the facts we are referring the facts for Assessment Year 2009-10 in ITA No 5063/M/2017. 2. Facts in brief are that the assessee is carrying his business in the name and style as M/s Hitesh Steel Syndicate. The assessee is in business trading in Iron and steel. The assessee has filed return of income for A.Y.2009-10, on 29.09.2011 declaring total income of Rs, 6,01,930/-. The case was re-opened u/s 147 on account of information received by the Sales Tax Department, State of Maharashtra that certain person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, etc. The Assessing Officer has relied solely on the report of the Sales Tax Department and the report of investigation team of revenue. These vendors collected tax from the purchaser (i.e. assessee) but not deposited into the treasury and not cooperated with the VAT department. Hence, list of Suspicious dealer was published and those buyers have taken input tax credit on the purchases effected from those vendors have been disallowed. The Assessing Officer relied upon the same and had ignored the materials and details brought before him. Similarly, the ld. CIT (A) has not given any finding on the various documentary evidences furnished by assessee. It was submitted that the disallowance @ 25% of the purchases is too high. The assessee has declared GP at 1.03% of his business based on such purchases. The VAT applicable on Steel Iron is only 4%. The disallowance of commission payment is based on assumption and presumptions and without any substance or material in possession of assessing officer. The ld AR for the assessee prayed for deleting the entire disallowances. In support of his submission, the learned AR relied upon the following judgments: * Geolife Organice v/s AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deepali Enterprises 80,80,068/- 10 Mahavir Enterprises 16,13,313/- 11 Samarth Trading Co. 11,54,542/- Total ₹ 3,53,13,219/- 6. The assessee was asked to substantiate the genuineness of the purchases. The assessee submitted that the purchases were made through brokers and not directly with the parties. The assessee furnished the copy of bills of corresponding purchases, ledger account of the parties and proof of payment through banking channel. The assessee also furnished the corresponding sale and details of vendors. The submission of assessee was not accepted by AO holding that no lorry receipt, transportation details, weight receipt, excise and gate pass was produced by the assessee. The AO further observed that the assessee failed to produce the supplier. The AO concluded that there was no actual delivery of goods and that assessee obtained accommodation bill. The purchases were made by cash payment. Thus, the AO rejected the books of account of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee has availed accommodation bills. The addition of alleged bogus purchased are based on third party information. We are of the considered opinion that under Income Tax Act only real income can be taxed by the Revenue. We may further note that even in cases where the whole transaction is not verifiable due to various reasons, the only taxable is the taxable income component and not the substantial part of the transaction. Thus, keeping in view the assessee has paid the VAT at the applicable rate on all the purchases. Further, in our view no yardstick formula can be applied while assessing the amount of revenue leakage. Moreover, the revenue has not disputed the consumption of steel. Hence, keeping in view of any possibility of the revenue leakage in the present case, the disallowance of purchases of steel at 5% of the purchases would meet the end of justice. Similar view was taken by Hon ble Gujarat High Court in CIT Vs Simith P Seth [2013(356 ITR 451)] and by Hon ble Bombay High Court in Hariram Bhambani ITA No 313 of 2013. 8. Thus, respectfully following the decision of Hon ble Gujarat High Court in CIT Vs Simit P Seth supra and by Hon ble Bombay High Court in Harir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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