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TMI Blog2018 (10) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 (4) TMI 709 - ITAT KOLKATA] for AY 2011-12 has restricted the disallowance @30% of the alleged bogus purchases. Therefore, we direct the AO to restrict addition @30% of alleged bogus purchases. Addition made towards capital goods from the alleged suspicious dealers - Held that:- We find that the ITAT, Mumbai Bench in the case of New Consolidated Construction Co Ltd vs DCIT [2017 (12) TMI 928 - ITAT MUMBAI] has considered similar issue and held that findings given in respect of purchases of raw materials shall apply to purchases of capital goods in case of alleged bogus purchases and accordingly direct the AO to estimate 12.5% profit on alleged bogus purchases of capital goods and balance amount shall be treated as capital asset and depreciation shall be allowed at the prescribed rates. Thus we direct the AO to estimate 30% profit on alleged bogus purchase of capital goods and the balance amount shall be treated as purchase of capital assets and accordingly, depreciation shall be allowed at the prescribed rates on capitalized portion - Decided partly in favour of assessee. - M.A. No.422/Mum/2018, M.A. No.423/Mum/2018 And M.A. No.424/Mum/2018 - - - Dated:- 17-10-2018 - Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is presumed that.,.,.... . As stated in para (i) above, the goods purchased relate to gift items, etc., are NOT SOLD but distributed to dealers, etc. Also, the goods do NOT form part of stock register. These are vital facts of the present case and therefore the observation made in ITAT order requires modification/ rectification. iii) In Ground no.4 of AY 2010-11, the applicant has contested the issue of purchase of capital assets of ₹ 1,97,14,945/- [other than Rs,4,59,25,643/-] from suspicious parties. This ground was argued but has remained to be adjudicated in the ITAT order. These purchases are other than those of gift items, etc. and do not form part of disallowance of 30% and hence, require to be separately adjudicated. In this regard, the AR has relied upon the decision of Mumbai ITAT in the case of New Consolidated Construction Co. Ltd. v. Dy. CIT, ITA No.3410/Mum/20l5, AY 2010-11, Bench T, order dated 15.12.2017, in para 10, page 8 of the order. This requires rectification. iv) In para 3, page 5 of ITAT order, it is observed that - In the meantime, a survey under section ]33A of the Act was conducted by the investigation wing of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that there are mistakes apparent from record in the order of the Tribunal (as stated above) and the same may be rectified / modified. 4. The applicant therefore prays that the Hon'ble Tribunal may be pleased to: a) rectify the mistakes apparent from record in the order dated 08.06.2018 and grant the relief prayed for in the aforesaid Miscellaneous Application; b) Any other relief which the Hon'ble Bench deems fit. 3. The assessee, vide its grounds No.5 6 of miscellaneous applications taken a plea that there is error in cause title as per which, the respondent has been taken for all three years as the Deputy Commissioner of Income-tax, Circle 6(2), whereas for different assessment years, the order has been passed by three different assessing officers, therefore, the same may be incorporated. 4. Having considered the arguments, we find that there is an error in mentioning respondent s name in the cause title which requires rectification. Accordingly, the cause title has been modified with the respective assessing officer for each assessment year, as under:- I.T.A No.2173/Mum/2016 ( Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts. In the process, it has purchased gift items, etc. which are distributed to dealers directly from its godown at Bhiwandi, Mumbai where more than 90% of the sales promotional items are purchased and delivered. These sales promotional items are distributed to its distributors / medical representatives / PSOs through the C F agents across the country. Therefore, the question of taking such purchase into stock registers and sale of such goods does not arise. These are factual errors therefore, the observations made in order dated 08-06-2018 requires modifications / rectification. The Ld.AR further submitted that the ITAT further observed at para 8 on page 15 that we are noticed from the assessment order and the order of CIT(A) that the sales are not at all doubted, only purchases are non-genuine, but in regard to these purchases, the assessee has made payment by account payee cheque and also included the goods in the stock register. Once the sales are not doubted, it is presumed that the assessee might have made purchases from grey market and obtained bogus bills to save VAT and purchases from grey market are made at a lower rate. The observations made by the ITAT are factuall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er stated that the assessee has furnished complete details of stock registers and also the AO and the Ld.CIT(A) never disputed sales declared by the assessee. The payments have been made by account payee cheques for alleged bogus purchases. Once the sales are not doubted, then general presumption is that assessee might have purchased goods from market and obtained purchase bills from entry providers to save vat component and reduce some amount is prices. On appraisal of the order passed by the lower authorities, it is very clear that the assessee has stated before the lower authorities that it has purchased sales promotional items including gift articles for distribution to its customers through the C F agents and such goods have been distributed from its own godown at Bhiwandi, Mumbai. The lower authorities have never disputed these facts, but they went on to make addition only on the basis of information received from Investigation wing which is based on information received from Sales-tax department on suspicious / hawala dealers. Further, the AO also relied upon the survey statement recorded during the course of survey u/s 133A, where the director of the company has admitted ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their bank accounts against payment received from the assessee. The assessee has also not taken any credit for the sales-tax paid by it on the said purchases. As such, the salestax department is also not put to any loss due to non payment, if any of sales-tax collected by those suppliers from the assessee on the above purchases. The so-called declarations made by the suppliers before the sales-tax authorities heavily relied upon by the AO were not provided to the assessee. No enquiries were made by the AO from the suppliers either u/s 133(6) or otherwise to establish the fact that the purchases were in the nature of accommodation bills. Merely because the assessee has voluntarily offered the said purchases to tax does not absolve the AO from his responsibility of proving that the purchases were in fact taxed particularly when the disclosure was impliedly retracted by contesting the addition during assessment and appellate proceedings. The AO has not brought out any evidence on record by conclusively proving that the purchases were not genuine and merely relied upon the sales-tax department s list coupled with assesse s own admission on the said purchases during survey action u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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