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TMI Blog2015 (11) TMI 1811X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that these transactions are not genuine & involved parties denied the transaction. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 26,26,083/- in respect of purchase from M/s. Shreeji Enterprises & M/s. International Steel Industries as hawala purchases without appreciating the fact that these transactions were not genuine & the assessee did not produce any evidence to prove its veracity. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 23,00,80S/- on account of purchases made from M/s. Panam Sales Pvt. Ltd. without appreciating the fact that these transactions were not genuine & the assessee did not produce any evidence to prove its veracity. 5. The appellant prays that the order of the Id. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 3. The Brief facts of the case are that the assessee is proprietor of Riddhi Siddhi Marketing and is engaged in the business of trading in iron and steel. During the year under consideration on the total turnover of Rs. 4.09 crores, the G.P. of 0. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business due to certain disputes with the parties and requested Revenue to take coercive action against the parties including levying penalties if they don't co-operate with Revenue . The assessee also submitted that he has already filed police complaint for loss of books of accounts due to which some details were not submitted. The AO observed that the assessee is not maintaining any stock register . the analysis of the bills show that these bills are not proper bills as the order number,date of order, dispatch through whom, lorry etc are not filled up. There is no opening and closing stock and hence the AO treated these purchases as bogus purchases. One of the parties, M/s Harsh Enterprises vide their letter dated 22-12-2009 stated that they have not done any transaction with the assessee during the assessment year. Similarly, M/s Precision Containers Ltd. stated vide letter dated 22-12-2009 that they have not done any transaction with the assessee during the assessment year. The A.O. observed that there was a difference in the purchases debited in the P&L account of Rs. 4,85,74,742/- and the details of purchase of Rs. 4,55,64,926/- from various parties submitted by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended by the assessee before the CIT(A) that because of the disputes with the parties, the parties have not submitted the details as called by the AO u/s 133(6) of the Act. It was contended that if there are no purchases , then sales would not have been possible and the AO has not disputed the sales made by the assessee and sales turnover was accepted by the Revenue. It was submitted by the assessee before the CIT(A) that the assesssee is a trader and whenever he receive the order, the goods are purchased and then sold in to other parties and no stock is maintained by the assessee. The assessee relied upon the following decisions in the case of : 1. Rohini Builders 127 Taxman 523(Guj.) 2. Kanchan Singh 174 Taxman 383(All.) 3. M.K.Bros. 163 ITR 249(Guj.) 4. Mehta P. Ltd. 174 Taxman 114 (Bom.) 5. Dhakeshwari Cotton Mills 26 ITR 775(SC) The assessee contended by placing reliance on above judgments that merely because the summons issued to some creditors could not be served or the creditors failed to appear before the AO could not be a ground for treating those creditors to be non-genuine. Similarly, the assessee contended that the AO is not entitled to make guess work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns with the assessee. The books of account have not been produced by the assessee and the accounts are unreliable and are liable to be rejected u/s 145 of the Act and mere fact that the transaction of purchase and sales are through cheques is not conclusive that the transactions are genuine in the facts and circumstances of the cases. The notices issued u/s 133(6) of the Act were also returned unserved in some cases . These facts indicate that the assessee is not making genuine purchases or sale of iron and steel but there cannot be sale without purchases and hence some deductions for the purchases has to be made, if the sales are to be accepted. The CIT(A) held that estimation of 20% of GP ratio is reasonable and the additions were confirmed to that extent. 6. Aggrived by the orders of the CIT(A), the Revenue filed an appeal before the Tribunal. 7. At the time of hearing, none appeared on behalf of the assessee and there has been non-appearance by the assessee since 2013 , therefore, we proceed to dispose of the appeal after hearing the ld. D.R.The Ld. DR submitted that notices have been served on the Chartered Accountant of the assessee but there is no appearance before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s work in absence of proper and correct accounts and only requirement is that the guess work should be honest and fair. The CIT(A) has cited several reasons in his orders dated 29.02.2012 for rejecting books of accounts of the assessee which are also reproduced in the preceding para's above and are not repeated again for the sake of brevity. We are fully in agreement with the judgment of Hon'ble Supreme Court and hold that the CIT(A) has keeping in view the peculiar facts and circumstances of the case has rightly rejected the accounts of the assessee as being unreliable however, in our considered view, however, the income based on GP ratio should have been estimated by the CIT(A) based on financial data's pertaining to the other entities belonging to the iron and steel industry so that honest and fair estimate of income based on GP ratio in the case of the assessee may be made as we have observed that the CIT(A) has merely made estimation of GP ratio of 20% of the turnover without disclosing the basis of arriving at the figure of 20% and how the income based on the said GP ratio of 20% in case of the assessee is honest and fair as per mandate of Apex Court decision in 288 ITR 10. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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