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TMI Blog2018 (11) TMI 1690X X X X Extracts X X X X X X X X Extracts X X X X ..... is applicable - we confirm additions to the tune of 12.5% of such bogus purchases - I.T.A. No.3471 to 3473/Mum/2015 (Assessment Year : 2009-10, 2010-11 & 2011-12) - - - Dated:- 27-11-2018 - Shri C.N. Prasad, Judicial Member And Shri Ramit Kochar, Accountant Member Assessee by: None Revenue by : Shri. Manoj Kumar Singh (DR) ORDER PER BENCH: These three appeals, filed by assessee, being ITA No. 3471 to 3473/Mum/2015, are directed against seperate appellate order(s) all dated 12.03.2015 passed by learned Commissioner of Income Tax (Appeals)-42, Mumbai (hereinafter called the CIT(A) ), for assessment year 2009-10, 2010-11 2011-12, the appellate proceedings had arisen before learned CIT(A) from separate assessment order(s) all of different dates viz.26.02.2014, 28.03.2013 and 26.02.2014 respectively passed by learned Assessing Officer (hereinafter called the AO ) for AY 2009-10, 2010-11 2011-12. Since , common issues are involved , all these three appeals were heard together and disposed by this common order. First , we shall take up appeal of the assessee for AY 2009-10 and our decision in appeal for AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee by the AO. The assessee had submitted copies of audit report in form no. 3CB and 3CD , copies of Profits and Loss account and Balance Sheet , audited statement of accounts etc. . The turnover of the assessee during the AY 2009-10 under consideration was ₹ 6,74,61,625/- and GP declared was ₹ 33,31,662/- i.e @ 4.94% . The AO observed that the assessee had debited purchases to the tune of ₹ 6,41,29,630/- to the Profit and Loss Account. The assessee was asked to file complete details of purchases along with name and addresses of the parties from whom purchases were made along with their TIN numbers. The assessee filed details called for by the AO along with documentary evidences as recorded in the assessment order. The AO observed that the assessee has made purchases from following parties , as under:- Sr. No. Name TIN PAN Particulars of Transactions A.Y Amount 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The Ld. CIT(A) after considering the submission of the assessee partly allowed appeal of the assessee by restricting the additions to the extent of gross profit margins to ₹ 35,11,220/- u/s. 69C , vide appellate order dated 12.03.2015 , by holding as under:- 2.3 I have considered the above submissions of the appellant, material available on record and the impugned assessment order on this issue. The list of the suspicious dealers and hawala parties have been obtained from DGIT(Inv), Mumbai. The Appellant has unable to prove the genuineness of the transactions by producing the parties or getting the confirmations from these parties. No reply or confirmation has been obtained to the notice/s issued u/s. 133(6) of the Income-tax Act, 1961. 2.4 Further, considering that the sales of the Appellant are genuine and has not been under doubt, the entire amount of purchases cannot be disallowed. Also, the AO has not brought any evidence on record to reflect that the sales of the Appellant are incorrect or in genuine or that there appears to be some anomaly in the reconciliation of the stock statements. The Gross profit margin of the Appellant is as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 to 2011-12. The said common order dated 11.07.2017 of the tribunal is placed in the file. It was submitted that the assessee also did not appeared before the tribunal when the Revenue appeal was called for hearing before the tribunal. Thus, it was submitted that the assessee is not vigilant in persuing his legal remedies and the assessee appeal may be dismissed. 8. We have considered contentions of the Ld. DR and perused the material on record. We have observed that the assessee is engaged in the business of Rubber products, chemicals and compounds. The AO received information from Maharashtra Sales Tax Department as well from DGIT(Inv.), Mumbai that the assessee had made purchases from certain parties who are hawala dealers engaged in providing accommodation entries wherein bogus purchases bills were issued by these dealers without supplying any material. The Maharashtra Sales Tax Department made enquiries wherein it was concluded that these parties are hawala dealers engaged in issuing bogus invoices without supplying any material. The assessee is one of the beneficiaries of the bogus accommodation entries from these hawala dealers. The assessee has claimed to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed a well reasoned order , wherein the disallowance was restricted to 12.5% of such bogus purchases , wherein tribunal vide orders dated 11.07.2017 held as under:- These appeal have been filed by the Revenue against the orders of the CIT(A)-42, Mumbai dated 12.03.2015 for assessment years 2009-10 to 2011-12. Since common issues are involved in all these appeals, they are disposed off by this common order for the sake of convenience. 2. The assessee has raised the following grounds for assessment years 2009-10 and 2011-12:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in allowing the bogus purchases made by the assessee without appreciating the fact that the assessee failed to furnish documentary evidence to prove that purchase made were genuine. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate the provisions of sections of section 69C of the Act which categorically states that where the assessee offers no explanation about the source of such expenditure or part thereof. For A.Y. 2010-11 assessee has raised one more ground which reads as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oving the purchases and could not produce evidence to show the actual delivery of material and could not produce confirmation letters from the alleged suppliers. However, we find that the assessee is in possession of purchase invoices and payments are through banking channels. Therefore, if at all the purchases are found to be bogus we note that the sales turnover has not been disputed by the Revenue. Therefore, in such a case the addition can be made only on the profit element embedded in these purchase transactions to factorise the profit earned by the assessee against the purchase of material in gray market. We find that there are divergent views of various High Courts on what amount of GP should be applied in such bogus purchases. We find that in the case of Smith and Sheth the Hon'ble Gujarat High Court has held that a trader sold some goods and he would purchase the same from other sources. When the total sale is accepted by the AO he could not have questioned the very basis of purchase. Therefore purchases are not bogus but they are made from parties other than those who are mentioned in the books of account. This being the decision not the entire purchase price but only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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