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TMI Blog2018 (8) TMI 1768X X X X Extracts X X X X X X X X Extracts X X X X ..... ineness of the claim of unsecured loan from 35 parties - HELD THAT:- The amount was disallowed in A.Y. 2008-09 on the basis of disallowance in the A.Y. 2009-10 which was to the tune of ₹ 1,44,935/- related to 12 parties. Out of these 12 parties only two parties were carried forward from earlier year. Remaining ten parties were reflected in the A.Y.2009-10. The total interest of two parties on ₹ 50,000 was only ₹ 1,02,280/- instead of ₹ 63,41,202/- which was not related to relevant assessment year. CIT(A) calculated the interest on account of factual basis in the relevant assessment year. Nothing came into notice that the calculation is factually wrong, therefore, in the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. - I.T.A. No.1712/Mum/2017 (Assessment Year: 2008-09) - - - Dated:- 29-8-2018 - Shri R. C. Sharma And Shri Amarjit Singh, JJ. Assessee by: None Revenue by: Shri T. A Khan ORDER Amarjit Singh, The revenue has filed the present appeal against the order dated 30.12.2016 passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 143(2) of the Act on 24.01.2013 and notice u/s 142(1) of the Act were issued and served upon the assessee. The assessee was engaged in the business of construction. On verification, it was noticed that the assessee has purchased the material from 3 parties to the tune of ₹ 5,64,799/-. The assessee purchased the material from Shri Ajay Stone to the tune of ₹ 3,09,818/-, Raj Traders to the tune of ₹ 1,30,493/- Riya Enterprises to the tune of ₹ 1,24,488/- and the total to the tune of ₹ 5,64,799/-. Notice u/s 133(6) of the I.T. Act, 1961 were issued but no one responded to the said notice. The assessee was asked to prove the genuineness of the claim but the assessee failed to prove the identity of the parities and to prove the genuineness of the claim, therefore, the said purchase was treated as bogus and added to the income of the assessee. The assessee also secured the loan to the tune of ₹ 2.28 crores in the A.Y. 2009-10 which was unexplained cash credit u/s 68 of the Act and added to the income of the assessee. The interest to the tune of ₹ 1,22,57,847/- was disallowed and reduced from work-in-progress (WIP). The appeal was pending befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his view about the bogus nature of the purchases made by the appellant from the above parties on the basis of non-compliances of notices u/s 133(6) of the I.T. Act. In my opinion, only on the basis non-compliance of notices u/s T33(G) regarding above mentioned three parties, cannot be Taken as The sole basis to Treat the entire purchases from These parties as bogus or non-genuine. The AQ is required to make further in-depth independent investigation on the issue. On the given set of facts and circumstances and without appreciating The evidences submitted by the appellant during assessment proceedings, entire purchases from These parties cannot be held to be bogus. I! has not been appreciated that the goods shown to be purchased from these parties were used in the business of The appellant and without which, corresponding Turnover would not possible. Thus, there ought to be purchases made and hence, entire disallowance is not justified. b. in this regard. I find the ratio raid down by the Hon ble High Court of Bombay in the case of CIT v. Nikunj Eximp Enterprises (P.) Ltd., quite relevant wherein Hon'ble High Court has held that 'When the assesses have filed lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased from grey market without proper billing or documentation. d. As o! now The Issue of such types of unverifiable purchases have been much discussed and debated by the various courts and Tribunals. In many judicial pronouncements on The issue. The Courts have taken a consistent view that in case of non-existent parties from which the purchases are shown to have been made, only part of such purchases can be disallowed, particularly in the such cases where the corresponding sales are not doubted. Alternatively, the profit embedded in such sales against the alleged bogus purchases should ba brought to tax. e. In the case of CtT-1 Vs Simit P. Sheth, ITA no. 553 of 2012, order dated 16.01.2013. while deciding a similar issue, the Hon'ble High Court of Gujarat has held That: 'We are broadly in assessment with the reasoning adopted by the Commissioner (Appeals) with respect to the nature of disputed purchases of stifle. it may ha that the three suppliers from whom the assesses claimed to have purchased the steel did not own up to such sales. Howsoever, vital question while considering whether the entire amount of purchases should be added back to the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l is dismissed. g. In view of the facts and circumstances and the judicial pronouncements cited above, what can be disallowed or (axed in The instant case, is the excess profit element embedded in such purchases shown to have been made from these parties. In this regard, the yardstick laid down by aforesaid judicial pronounce men Is by disallowing 20% of purchases as the benefit garnered in such unverifiable purchases where safes are not disapproved, is ? sound benchmark that is being adopted in the present case too. h. Therefore In the instant case, it is found that all the facts and circumstances outlined above lead to the conclusion that although The purchases made by the appellant from the three parties mentioned above during the year under consideration cannot be summarily rejected but at me same Time it difficult to accept that The purchases shown on the invoices/bills issued by these parties are as per the prevailing market price of those materials or actually been made from such parties and might have been purchased in the grey market, The appellant has not placed any evidence on record that the goods were purchased from the above parties at arms' length price. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 has deleted the made on account of unsecured loans from 23 parties and sustained the addition r account of unsecured loans from 12 parties. In the appellate order, the Ld. CIT -considered each and every party in the light of the findings of the AO in the assessment and remand and came to the conclusion that interest of only ₹ 1,44,935 needed to disallowed while balance amount would be allowed. b. According to the appellant, the amount which was disallowed in 20Q3-20Q9 on the bases of disallowance in A.Y.2009-10, was ₹ 1.44,935/- Le. related to the twelve parties. According to the L3. AR, out of these 12 parties only two parties were carried forward from earlier year. Remaining ten parties were reflected in A.Y. 2009-2010 due to fresh loans borrowed in A.Y.2009-2010. Thus, total interest of two parties on Rs. B.50,000 was only ₹ 1,02,2 0/- and hence only ₹ 1,02.230'- should be [educed from WlP and not ₹ 83.4l.202/-. c. The AO is accordingly directed to examine the claim of the appellant above, in the light of documentary evidences and findings of the Ld. C|T{A) for A.Y. 2009-10 He is directed to reduce the interest component with Respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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