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TMI Blog2020 (4) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... regard. - Shri Shamim Yahya, Hon'ble Accountant Member And Shri C.N. Prasad, Hon'ble Judicial Member For the Assessee : Shri Subhash S. Shetty, Shri R.N. Vasani And Shri V.H. Vasani For the Department : Shri Michael Jerald ORDER PER C.N. PRASAD (JM) 1. These appeals and cross objections are filed by the Revenue and assessee against the common order of the Learned Commissioner of Income Tax (Appeals) 51, Mumbai [hereinafter in short Ld.CIT(A) ] dated 06.11.2018 for the A.Ys. 2010-11 2011-12. 2. In both the appeals Revenue has raised the following identical grounds except for figures: - 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition to 25% of bogus purchase of ₹ 1,06,18,400 despite upholding that the assessee company is unable to substantiate its purchase from the claimed suppliers who had been already established hawala dealers from Sales Tax Department and investigation wing of the Income Tax Department? 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition to 25% of bogus purchase despite upholding that the assessee could not produce primar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold; as there cannot be sale of nonexistent purchases the purchases are fully allowable. 4. Not convinced with the submissions of the assessee the Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there being any transportation of materials and the assessee might have made purchases in the gray market. It is the finding of the Assessing Officer since the purchases made by the assessee and claimed as expenses in his Profit and Loss Account are not genuine, the purchases to that extent remained unverifiable and rejected the Books of Accounts. Assessing Officer observed that the notices issued u/s. 133(6) of the Act and summons u/s. 131 of the Act to the parties were returned unserved with a remark Not known and the assessee has not produced the parties before the Assessing Officer. Therefore, Assessing Officer treated purchases of ₹.1,06,18,400/- and ₹.51,65,318/- for A.Y. 2010-11 and 2011-12 respectively as non-genuine and added to the income of the assessee. On appeal the Ld.CIT(A) considering the evidences and various submissions of the assessee restricted the disallowance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the order of the Hon'ble ITAT is perverse as no reasonable person acting judicially and properly instructed in the relevant law could arrive at such a finding on the evidence on record? 2 The issues relate to the Assessment Year ( A.Y. for short) concerning the respondent - assessee who is a trader of fabrics. During the survey operations in case of the entities from whom the assessee had claimed to have made purchases, the department collected information suggesting that such purchases were not genuine. The Assessing Officer ( A.O. for short) noticed that the assessee had shown purchases of fabrics worth ₹ 29.41 Lacs (rounded off) from three group concerns, namely, M/s Manoj Mills, M/s Astha Silk Industries and M/s Shri Ram Sales Synthetics. On the basis of the statement recorded during such survey operations, the A.O. concluded that the selling parties were engaged only in supplying the bogus bills, that the goods in question were never supplied to the assessee, and therefore, the purchases were bogus. He, therefore, added the entire sum in the hands of the assessee as its additional income. 3 The assessee carried the matter in the appeal before the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case the Tribunal has categorically observed that the assessee had shown bogus purchases amounting to ₹ 2,92,93,288/- and taxing only 25 % of these bogus claim goes against the principles of Sections 68 and 69C of the Income Tax Act. The entire purchases shown on the basis of fictitious invoices have been debited in the trading account since the transaction has been found to be bogus. The Tribunal having once come to a categorical fiding that the amount of ₹ 2,92,93,288/- represented alleged purchases from bogus suppliers it was not incumbent on it to restrict the disallowance to only ₹ 73,23,322/ 6 Counsel pointed out that the S.L.P. against such decision was dismissed by the Supreme Court. 7 On the other hand, Ms Khan learned counsel for the assessee opposed the appeals contending that the Tribunal has given proper reasons. The assessee was a trader. Even if the purchases are found to be bogus, entire purchase amount cannot be added by way of assessee's income. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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