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TMI Blog2020 (4) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer ('AO') u/s 147 of the Act. 2. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) has erred in upholding the disallowances of Rs. 87,61,453/-, being the total amount of purchases from alleged bogus parties, without considering the fact that the Appellant is a trader and the sales against such purchases made by the Appellant have not been disputed. 3. The brief facts of the case are that the assesee is an individual and proprietor of M/s Navpad Chemicals is engaged in the business of whole seller and reseller in Dyes, Chemicals & Pharma Items, filed his return of income for AY 2009-10 on 25/09/2009, declaring total income at Rs. 6,95,124/-. A survey operation u/s 133A of the Act, was carried out on 04/12/2012 in the business premises and godown of the assessee. During the course of survey, it was observed that the assessee was involved in dealing with parties, who were issuing bogus purchase bills in order to reduce the taxable profits. During the course of survey, a statement of the assessee was recorded on oath, where he had admitted of having taken accommodation entries of bogus purchases bills from various parties in order to reduce its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hered during the survey proceedings conducted u/s 133A coupled with information received from DGIT(Inv.), which suggests escapement of income, on account of obtaining accommodation entries of purchase bills, which is sufficient to form reasonable belief of escapement of income within the meaning of section 147 of the I.T.Act, 1961. He, further noted that although, the assessee has cited the decision of the Hon'ble Supreme Court, in the case of GKN Driveshafts (India) Ltd. vs ITO (supra), but fact remains that the assesee never asked for reasons recorded for reopening of assessment at any time, during the assessment proceedings and also, has not filed any objections for reopening. Therefore, it is incorrect to say that the procedure laid down by the Hon'ble Supreme Court in the above case is not followed by the Ld. AO. As regards, additions made by the Ld. AO towards unexplained expenditure being bogus purchases, the Ld.CIT(A) observed that it is a fact of matter, as per assessment order of the Ld. AO, not a single penny has been added to the return of income filed in response to 148 notices issued for reopening of assessment and thus, there cannot be any cause of grievance and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs and accordingly, it has made a fresh claim before the Ld.CIT(A), but the Ld.CIT(A) has rejected arguments of the assesee only on the ground that there is no addition made by the Ld. AO towards bogus purchases and what was done is accepted return filed by the assessee without making any additions towards total income declared in the revised return. The Ld. AR, further submitted that the law is very clear, insofar as, addition on the basis of admission as per which no additions can be made only on the basis of statement recorded during the course of survey, if such admission is not corroborated by necessary supporting evidences. In this case, there is no iota of evidences, either in survey proceedings or during the assessment proceedings of any evidences, which suggest accommodation entries except the statement of the assesee during the survey. The Ld. AR, further submitted that the issue involved in the appeal is well settled now by the decisions of various High Courts and Tribunal, where the jurisdiction Tribunal has constantly held that in case of bogus purchases only profit element embedded in such purchases needs to be taxed, but not whole purchases, from the so called hawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appellate authorities and the appellate authorities are at liberty to admit additional ground and claims made by the assesee in accordance with law. The Hon'ble Bombay High Court, in the case of CIT vs Prithvi Brokers and Shareholders (2012) 349 ITR 336 (Bom.) clearly held that an assessee is entitled to raise not merely an additional legal submission before the appellate authorities, but is also entitled to raise additional claims before them and the appellate authorities have discretion, whether or not to permit such additional claim to be raised, however, they have no jurisdiction to consider the same. The sum and substance of the ratios laid down by the above judicial precedents is that the assessee can make not only additional ground, but also additional claims without filing revised return of income. In this case, on perusal of facts, it is noted that although, the assessee has made an additional claim towards unexplained expenditure being bogus purchases without filing revised return of income before the Ld. AO, but such claim has been made before the Ld.CIT(A) during the appellate proceedings. Therefore, we are fo the considered view that the Ld.CIT(A) was erred in not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is very clear that even, if assessee admits income or not claimed any deduction for any expenditure by misconception of law or fact, then it is the duty of the Ld. AO to compute the correct total income and tax liability of the assessee. Hence, we are of the considered view that the Ld.CIT(A) was erred in not considering the claim of the assessee towards alleged bogus purchases, merely for the reasons that the assessee has admitted additional income in the statement recorded during the course of survey and further, filed revised return and incorporated additional income. 11. Insofar as, the issue of additions made towards alleged bogus purchases from hawala/suspicious dealers, we find that during the course of survey proceedings u/s 133A or even, during the course of assessment proceedings, the Ld. AO never brought on record any evidences, except the statement of the assessee made during the course of survey to prove that the alleged purchases claim to have been made from certain parties are non genuine. The Ld. AO has solely relied upon the statement of the assessee made, during the course of survey and further, taken support from the investigation carried out by the MVAT depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 5.61% to 5.91% for AY 2009-10 to AY 2011-12. Although, the rate of gross profit declared by the assessee in his books of accounts is not a correct yardstick to determine the profit element in alleged bogus purchases, but if you go through the nature of business of the assessee and industry practice, at any point of time 100% additions cannot be sustained. Further, although the assessee has cited the decision of Hon'ble Bombay High Court in the case of Mohammad Hazi Adam and Company vs PCIT(supra) and requested to scale down additions made by the Ld. AO towards gross profit rate of other purchases, but the claim of the assessee cannot be accepted, because the gross profit declared by the assessee in its regular books of accounts cannot be considered as correct in view of the fact that there is some sort of doubt is still there, in respect of purchases claim to have made from certain parties. Therefore, we are of the considered view that after considering facts and circumstances of this case and consistent with view taken by the co-ordinate bench in number of cases a reasonable amount of profit needs to be estimated of alleged bogus purchase to meet the ends of the justice. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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