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TMI Blog2018 (8) TMI 1626X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds of appeal. 3. Rival contentions have been heard and record perused. Facts in brief are that assessee is carrying business of trading of stainless steels and consignee agent and business of trading of ferrous and non ferrous metal. Assessee usually purchases goods from well known concerns of Jindal Group named JSL Limited and Remi Edelstahi Tubalars Limited. Jindal Stainless Limited is one of the largest integrated manufacturers of stainless steel in India. 4. The department got information regarding bogus supplier, therefore, a survey was also conducted u/s.133A by Income Tax Department on assessee where no adverse documents found at assessee premises. Assessing officer send notices to those defaulter which shown as not served. Further during the assessment Ld. A.O. further wanted to verify all other supplier purchases other than Jindal Group amount to Rs. 48,39,52,303/-. Assessee submitted all details in respect of those purchases but Assessing officer was still unsatisfied with the submissions so filed by assessee. Hence for peace of mind, assessee agreed for addition of 0.10%-0.15% of alleged purchases. However, the AO added 1.83% of entire purchases which is Rs. 103,49, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are levied hence there is not Excise duty invoices in remaining purchases of goods. As per learned AR making comparison between two bills which is incomparable itself is bad in Laws. All sales of assessee were accepted and corresponding sales is not doubted by Assessing Officer. 7. With regard to the bogus purchases, it was contended by learned AR that the assessee was using the company for the purpose of providing sale bills for which he was collecting some margin. At the time of survey no evidence was found to suggest that the assessee was engaged in real commission business. No other source of income was also found. 8. As per learned AR, this issue of determination of rate of commission in case of accommodation transaction arose before the ITAT in case of Sanjay Kumar Garg vs. ACIT [2011] 12 taxmann.com 294 (Delhi) wherein Tribunal held as under:- "-49. The next issue arises for estimation of commission income. In the statement the assessee at the time of survey under section 133A had stated that he charged 25p as commission for providing accommodation entries and out of that 25p he paid to others in whose name bank accounts were maintained and 15p was spent on expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement given by the assessee on oath during the course of survey proceedings has to be given credence. The assessee has floated the bogus concerns and has controlled the accounts. During the course of survey, no material was found on the basis of which it could be said that the assessee had passed on. 1 per cent commission to the persons in whose names the bank accounts were maintained. In the absence of any evidence having brought on record, we are unable to agree with the assessee that the assessee had passed on commission of 10 Ps. to the persons in whose names dummy concerns were floated. However, in the business of entry provider certain expenditure has to be incurred which has been stated to be 5p during the course of survey. Therefore, credit of 5p out of 25p received as commission has to be allowed. Therefore, the Assessing Officer is directed to estimate commission income by applying 0.2 per cent net commission on turnover determined by the Ld. CIT (A) for both the assessment years as against 1 per cent taken by Him." 10. Reliance was also placed on the jurisdictional M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut evidence. * ITO V/s Permanand [2008 25 SOT 11] * IT V/s M K Bros. [163 ITR 249] CIT V. Kashiram Textile Mills P Ltd. [2006] ITR 61 (GUJ) Saraswathi Oil Traders V. CIT [2000] 284 * 254 ITR 259 (SC),174 CTR 108 (SC) 13. As per learned AR merely on the information of third party without providing opportunity of cross examination, no addition can be made. For this purpose, reliance was placed on the following judicial pronouncements. * Kishan Chand Chella Ram v. CIT [1980] T25ITR713 (SC) * Marneedi Satyam V/s Masimukkula Venkataswami [ AIR 1949 Mad 689] * ITO V/s Permanand [2008 25 SOT 11] 14. As per learned AR since all the payments were made through account payee cheque, this fact would overshadow all other short comings. For this purpose reliance was placed on the following judicial pronouncements. * Mather & Platt (India) Ltd. vs CIT 168 ITR 493 Cal * ITO V/s Kashmir Ind. Palace 99 Taxmann (Chd) (Mag) * RamanandSagar V/s DCIT 256 ITR 134 (Bom) * CIT-I v.Nangalia Fabrics (P.) Ltd. [2013] 40 taxmann.com 206(Gujarat) * CIT V. Korlay Trading Co. Ltd. [1998] 232 ITR 820 (CAL) * CIT V/s Basant Investment Corporation (1999) 238 ITR 680 (Cal). 15. As per learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of hearing before us. From the record, we found that there was a survey at the assessee's premises with respect to the information regarding bogus purchase bill. The AO found that assessee has taken bogus purchase bill as per the information of the Sales Tax Department. Assessing officer send notices to those defaulter which shown as not served. Further during the assessment Ld. A.O. further wanted to verify all other supplier purchases other than Jindal Group amount to Rs. 48,39,52,303/-. Assessee submitted all details in respect of those purchases but Assessing officer was still unsatisfied with the submissions so filed by assessee. Hence for peace of mind, assessee agreed for addition of 0.10%-0.15% of alleged purchases. However, the AO added 1.83% of entire purchases which is Rs. 103,49,27,162/- i.e. amount of Rs. 1,89,39,167/-. However, CIT(A) after relying on the decision of Gujarat High Court in case of Smith P Seth enhanced income up to 12.50% of entire purchases amounting to 103,49,27,162/-. 21. From the record we found the following details of purchases: Purchases from Supplier who did not paid sales Tax (Hawala Dealers as per Income Tax Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. For this purpose, reliance was placed on the following judicial pronouncements. * Balaji Textile Industries (P) Ltd v. ITO(1994) 49 ITD 177 (Bom) * DCIT v. Adinath Industires (2001) : 252 ITR 476 (Guj) * CIT v. M K Brothers (1987) : 163 ITR 249 (Guj * DCIT v. Adinath Industries (2001) : 247 ITR 35 * DY.CITV. BRAHMAPUTRA STEELS (P) LTD. [20O2] 122 TAXMAN 32 IATA - Gauhati) 27. From the record we found that before AO, assessee has filed following details with documentary evidence. * Comparative Trading Account with GP Ratio * Purchases from suppliers whose name is not appearing in list of Hawala Dealers * Corresponding Sales of suppliers whose name is not appearing in list of Hawala Dealers ; * Purchases from suppliers whose name is appearing in list of Sales Tax Department as they was VAT defaulter * Corresponding Sales of suppliers whose name is appearing in list of Sales Tax Department as they was VAT defaulter * Sales Tax Order under Mahavat Act * Affidavit by Director before Sales Tax Authorities * Details of Purchases with name, address, item, quantity and amount for the AY 2011-12 * Details of Sales with name, address, item, quantity and amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Purchases and sales on which sellers have not paid VAT as per Mahavat site and as per income Tax Department they are hawala dealers Particulars Qty (M.T.) Amount Particulars Qty (M.T.) Amount To Opening Stock By Sales 2,604 567,132,422 To Purchases 2,604 554,525,794 By Closing Stock Less: Purchases Return 3,550,935 550,974,859 To Gross Profit 16,157,563 2603.865 567,132,422 2,604 567,132,422 30. We also observe that AO has not rejected the books of accounts. In respect of total sales, assessee had shown GP of 2.39%. However, GP shown in respect of genuine purchases was 0.12%. However, the GP shown on the purchases made through hawala dealers was at 2.66%, whereas GP on the purchases made from the parties who have not paid VAT as per Mahavat Act at 2.85%. Thus, it is very clear that assessee had declared much more GP on the purchases alleged to be made through hawala parties, thus, assessee had not shown lower profit in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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