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TMI Blog2018 (3) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... Suman Kumar ORDER PER BENCH: These are the appeals filed by assessees against the order of CIT(A)-30, Mumbai dated 14/03/2017 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. 2. Common grounds have been raised by both the assessees with regard to the addition of 12.5% made in respect of bogus purchases found during the course of survey. Assessee has also challenged reopening of assessment u/s.147. Facts of both the assessees are same in both the years under consideration. 3. Rival contentions have been heard and record perused. 4. Facts in brief are that assessee namely Babulal B Kanungo is an individual engaged in the business of Trading in ferrous and non-ferrous metals' under the proprietary concern by name M/s Alpesh Metal Corporation. The return of income for the Assessment Year 2010-11 was filed on 25-09-2009, declaring total income of ₹ 4,09,000/-. There was survey in the business premises of assessee, thereafter case was reopened u/s 147, by issuing notice u/s 148 of the Act on 22-08-2013, based on the information received from the DGIT(Inv.), Mumbai, who in turn received the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , weighing bill, goods receipt notes (CRN), subsequent sale/manufacturing details. When the sales tax department has classified the five parties as hawala dealers and has subsequently forwarded the information to the Income Tax Department that the appellant is one of the beneficiaries, onus of very high degree is on the appellant to prove with infallible evidence that the purchases are genuine and -the material was received by the appellant from these parties. But, the appellant is not able to produce any evidence whatsoever either before the AO or even in the present proceedings to prove that the goods in terms of quantity and quality from the above said parties were actually received by the appellant. The appellant has not produced copies of the consignments, if any, received from the transport contractor showing that the material purchased from the consignors was actually delivered to the appellant and freight has been paid thereon. The Appellant is also not able to provide copies of the CRN evidencing the receipt/delivery of the goods along with the relevant purchase orders in respect of impugned purchases. The appellant is also not able to produce goods consignment note, trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo cases cited above. Thus, the issue would boil down whether the element of profit adopted by the AO @12.5% treating the same as the profit element embedded in such bogus purchases, which the appellant would have made from some unknown entities is correct or not. Gujarat High Court in the case of Bholanath Poly Fab Pvt. Ltd. 355 ITR 290 (Guj), the case relied upon by the AO, the Hon'ble Court was battling with the finding of Hon'ble ITAT that purchases were made from bogus parties since notice issued by the A.O, to these parties were allegedly received returned/unserved' and the assessee was unable to produce any confirmation from these parties. The Tribunal had held that though purchases were made from bogus parties, nevertheless, the purchases themselves were not bogus as the entire quantity of .opening stock, purchases and sales were tallying and hence, only the profit margin embedded in such amount would be subjected to tax. The Hon'ble Gujarat High Court taking cognizance of the fact held that whether purchases themselves were bogus or whether parties from whom such purchases were made were bogus, is essentially a question of fact and the Tribunal having exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be at a particular sum or at a different sum, can never be an issue of law. 6.8 Similarly, in the other decision of Hon'ble Gujarat High Court in the case of CIT vs. Simit Sheth 356 ITR 290 (Guj), relied upon by the AO for making the addition, Hon'ble Court was seized with the similar issue where the AO had found that some of the alleged suppliers of steel to the assessee had not supplied any goods but had only provided sale bills and hence, purchases from the said parties were held to be bogus. The AO, in that case added the-entire amount of purchases to gross profit of the assessee. Ld. CIT (A) having found that the assessee had indeed purchased though not from named parties but other parties from grey market, partially sustained the addition as probable profit of the assessee. The Tribunal however, sustained the addition to the extent of 12.5%. Taking into account the above facts, the Hon'ble Gujarat High Court held that since the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded in such purchases could be added to the assessee's income and as such no question of law aros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring survey were placed. 10. Learned AR contended that matter should be restored back to the file of AO so that assessee can furnish proper explanation with regard to the alleged bogus purchases, the transportation bill, delivery challans etc., 11. Learned AR also placed on record the order of the Co-ordinate Bench wherein credit was given for the GP rate already shown by the assessee while estimating addition of 12.5% of the alleged bogus purchases. 12. We have considered rival contentions and carefully gone through the orders of the authorities below. So far reopening is concerned, we found that reasons recorded by AO were sound for reopening the assessment in so far as AO had sufficient reason to believe that there was escapement of income in the form of bogus purchase. From record we found that during the course of survey, the AO has found that assessee has taken bogus bills from the non-genuine suppliers. After issuing notice u/s.133(6) to all the suppliers, he came to the conclusion that these suppliers did not exist and also did not appear before the AO, accordingly, he concluded that purchases were not genuine and he added 12.5% of such purchases which were confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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