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TMI Blog2020 (4) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to disallow 12.5% of the purchases value which are under dispute. - Decided partly in favour of revenue. - I.T.A. No. 5596/Mum/2016 And I.T.A. No. 5384/Mum/2016 - - - Dated:- 10-2-2020 - Shri Pawan Singh, JM And Shri S. Rifaur Rahman, AM For the Appellant : Shri Aditya Ajgaonkar, AR For the Respondent : Shri V. Vinod Kumar, DR ORDER PER S. RIFAUR RAHMAN (ACCOUNTANTMEMBER): The present two Appeals have been filed by the assessee and revenue against the order of Commissioner of Income Tax (Appeals)-2, Thane, dated 30.06.2016 for AY 2011-12 respectively. 2. Since the issues raised in both the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed of by this consolidated order. 3. The brief facts of the case are, assessee is an individual and engaged in the business of scrap material and iron steel. Assessee filed its return of income on 19.09.11 declaring total income of ₹ 16,17,750/-. Subsequently, AO received information from Sales Tax Department about large number of entities who have provided bogus purchase bills to a large number of tax payers. Based on the information, assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 737 1.29 10,38,165 2011-12 20,68,31,682 3.07 63,55,840 0.84 17,32,126 2012-13 11,88,19,441 3.65 43,34,151 1.22 14,44,247 2013-14 11,36,78,654 4.56 51,80,077 1.31 14,89,133 10.11 From the above chart, it is noticed that the gross profit rate has gone down from 4.66% in AYr 2007-08(non-hawala purchase year) to 3.07%, in AYr 2011-12 (hawala purchases year), the year in which the alleged hawala purchases, were booked, for which the appellant could not offer any valid explanation. These facts clearly established that the appellant had suppressed its profits by booking alleged hawala purchases as above, as compared to GP of AYr 2007-08. This has resulted into suppression of gross profit by ₹ 32,82,624/-. If the GP rate is compared with A.Y.10-11, shown from goods traded from regular parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-12, respectively. In compliance, the Ld AR could not offer any valid explanation, for selling goods at losses are at low margin, in respect of goods traded through hawala dealers. These facts clearly establish the fact that appellant had suppressed its profits by inflating its purchases through alleged hawala dealers, which are not open for verification. From the facts of the case, it is noticed that the appellant had affected the purchases of ₹ 90,90,345/- and ₹ 1,36,75,254/, as against total turnover of ₹ 8,05,85,931/- and ₹ 20,68,31,682/-, in A Yr 10-11 and 11-12, respectively, from alleged hawala parties. These facts clearly establish the fact that this is not a case where the entire cash has been siphoned off by debiting the above bogus purchases declared rather it is a case where the appellant has suppressed its profit by affecting inflated purchases through alleged hawala parties, which are not open for verification, as the corresponding sales have been declared in the books. 10. 14 It is pertinent to mention here that the appellant was able to harvest GP@ 5.73% in A Yr 10-11, in respect of goods traded from the regular parties, by same ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 81,73,530/- (₹ 1,36,75,254/- Less ₹ 55,01,723/-), is hereby deleted. Accordingly, this ground of appeal, is partly allowed. In result the appeals, for both the years, are partly allowed. 5. Aggrieved with the above order, both assessee and revenue are in appeal before us with the following grounds:- 1. On the facts and in the circumstances of the case, the Ld. CU(A) has erred in relying on the decision of Supreme Court in the case of Kanchwala Gems Vs. JCIT 288 ITR 10(SC) and Hon'ble High Court's decision in the case of Vijay Protein, Sanjay Oil Cake Industries, etc.. 2. On the facts and in the circumstances of the case, and in law, the Hon'ble CIT(A) erred in not following the order of ITAT, Pune in UA No. 1411-1415 dated 20.02.2015 in the case of M/s. Kolte Patil Developers Ltd. wherein 100% addition of bogus purchases was confirmed. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in giving relief to the assessee to the extent of suppressed G.P. out of total bogus purchases even though- (i) The assessee could not produce primary evidences like Octroi Receipts, Delivery Challan etc. evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions of the assessee from AY 2007-08 to 2013-14. Looking at the transactions, the business of the assessee grown from 3.4 to 20.68% from AY 2007-08 to 2011-12. But the results of the assessee are fluctuating year on year. Only in AY 2010-11, assessee has declared gross profit of 5.24%, whereas in other years it is around 3%. Ld. CIT(A) has only analyzed that how the assessee has generated gross profit from regular transactions and transactions with disputed purchases. It is only a finding that assessee has earned profit from these transactions and it is not final that Ld. CIT(A) should adopt only the profit declared by the assessee during the respective year. There is no change in the business model of the assessee and why the profit declared in the AY 2010-11 cannot be same for this assessment year also. We notice that during this current AY, the turnover of the assessee has grown to 20.68 crores against 8.05 crores, even though there is sharp increase in the turnover, the assessee declared only 3.07% as the GP. Since Ld. CIT(A) has adopted previous year gross profit as the base for this AY also. But the results achieved by the assessee for the period is not reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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