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TMI Blog2019 (9) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in respect of alleged bogus purchases vis- -vis purchases other than alleged bogus purchases. Similarly, in the A.Y.2010-11 margin earned in respect of normal purchases i.e. purchases other than from alleged bogus purchases is 2.65%, whereas margin in respect of alleged bogus purchases is 1.89%. Thus, the difference in margin is just 0.76%. Thus, we found that upholding the addition to the extent of 2% of bogus purchases will serve the end of justice, which is in consonance with the order passed by the Tribunal in assessee s own case and group concern, as stated above. Since the Tribunal have already upheld the addition to the extent of 2% in respect of purchases made from M/s. Sai International Impex, which purchases was again added by the AO while completing assessment u/s.143(3) r.w.s. 153A, which amounts to double addition. Accordingly, AO is directed to take care of addition already upheld by the Tribunal in respect of purchases from M/s. Sai International Impex - ITA No.3861/Mum/2018, ITA No.3862/Mum/2018, ITA No.3793/Mum/2018, ITA No.3792/Mum/2018 - - - Dated:- 11-9-2019 - Shri R.C. Sharma, AM And Shri Pawan Singh, JM For the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case. The ld. CIT(A) also deliberated on various judicial pronouncements on the issue. Precise conclusion of the ld. CIT(A) was as under:- 7.34 In view of the aforesaid discussion, the AO is directed to compute the additional profits in respect of the purchases from the said 5 alleged hawala / bogus suppliers - M/s Aadit International (₹ 12,25,497/-), M/s Mishika Traders (I) P Ltd (₹ 3,65,58,677/-), M/s N K 8 Metal Deals (I) P Ltd (₹ 5,04,15,036/-), M/s Ragini Trading Investments P Ltd (₹ 15,77,02,992/-), M/s S B Metal Corporation (₹ 8,55,46,613/-) and M/s Sai International Impex (₹ 9,37,11,967/-) by adopting a rate of 12.5%, However, the AO will allow a set off of the GP already shown by the assessee in the regular books in respect of the purchases from the said alleged hawala / bogus suppliers while computing the additional profits in respect of each of the alleged hawala / bogus suppliers. Moreover, the amount of purchases from M/s. RTIPL which have been sourced from alleged hawala /bogus suppliers should be quantified by the AO and the rate of 12.5% should be applied to such purchases to compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stics and follow Just In Time (JIT) Methodology. This aspect was also evident from the details of purchase invoice sales invoice as these happened on the same date. Nature of business is such that assessee has back to back purchases sales. The assessee does not take the possession of goods but ensure that goods directly go from supplier to customers without being involved in logistics. Accordingly, the assessee was not having the copies of delivery challans or lorry receipts / transportation receipts. However, not satisfied with the assessee s reply, AO added entire amount of such purchases in assessee s income. 7. By the impugned order, CIT(A) restricted the addition to the extent of 12.5% of G.P. less the profit already declared by assessee in respect of purchases from these parties after relying on the decision of M/s. Sanket Steel Traders [IT No. 2801/Ahd/2008 dated20/05/2011] and CIT Vs. Simit Sheth (2013) [38 taxmann.com 385 (Guj. HC)]. It was argued by learned AR that M/s. Sanket steel was carrying out its business operation in city of Vadodara, Gujarat and the judgement related to AY 2004-05 whereas the present assessee is operating in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vis normal purchases. Meaning thereby the addition should be confined to gross profit shown on the bogus purchases which is found to be lower than the gross profit on normal purchases. The precise observation of the Hon ble Bombay High Court was as under: 8 In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is not stockiest, as such is running its business on meager profit by keeping a small margin difference between purchase price sales prices by undertaking purchase transaction for every corresponding sales transaction. 13. We had also carefully gone through the order of the Tribunal in assessee s own case for the A.Y.2010-11 dated 04/04/2018 wherein under similar facts and circumstances alleged bogus purchases from one of the parties i.e. Sai International Impex was found, and the Tribunal after considering all the facts and circumstances restricted the same to the extent of 2% after observing as under:- 10. We have considered rival contentions and carefully gone through the orders of the authorities below. We have also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR during the course of hearing before us in the context of factual matrix of the case. From the record, we found that 25% of purchases alleged to be bogus was added by AO in assessee's income. CIT(A) has reduced same to 12.5%. Before the AO, assessee has filed year wise details of purchases, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods so purchased and sold, the correctness of which was not doubted by the lower authorities. Under these facts and circumstances and respectfully following the order of the Tribunal in assessee s own case, wherein the facts and circumstances are same, we direct the AO to restrict addition to the extent of 2% of bogus purchases. 15. From the record, we also found that in the A.Y.2008-09, assessee had shown profit of 0.62% on the normal purchases i.e. purchases other than alleged bogus purchases, whereas margin earned in respect of alleged bogus purchases was 0.61%. Thus, we found that there is only difference of 0.01% in the margin shown by the assessee in respect of alleged bogus purchases vis- -vis purchases other than alleged bogus purchases. Similarly, in the A.Y.2010-11 margin earned in respect of normal purchases i.e. purchases other than from alleged bogus purchases is 2.65%, whereas margin in respect of alleged bogus purchases is 1.89%. Thus, the difference in margin is just 0.76%. Thus, we found that upholding the addition to the extent of 2% of bogus purchases will serve the end of justice, which is in consonance with the order passed by the Tribunal in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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