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TMI Blog2021 (2) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... ri C.N. Prasad, Hon'ble Judicial Member For the Assessee : Chaitee Londhe For the Department : Shri Sanjay J. Sethi ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the revenue against order of the Learned Commissioner of Income Tax (Appeals) 5, Mumbai [hereinafter in short Ld.CIT(A) ] dated 26.04.2019 for the A.Y. 2009-10 in restricting the addition to 13.71% as against the entire bogus purchases disallowed by the Assessing Officer. 2. Briefly stated the facts are that, assessee an individual, filed return of income on 30.09.2009 declaring income of ₹.2,98,580/- for the A.Y.2009-10 and the return was processed u/s. 143(1) of the Act. Subsequently, Assessing Officer received information from the DGIT (Inv.,), Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. The assessment was reopened U/s. 147 of the Act based on the information received from DGIT (Inv.,), Mumbai, that the assessee has availed accommodation entries from various dealers who are said to be providing accommodation entries without there being transportation of any goods. In the reassessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant has requested to delete the impugned disallowance of ₹ 3,49,677/-, being purchases made from bogus/hawala parties. The appellant has made detailed submissions, as above and the same have been considered carefully. It is admitted fact that the above referred dealers/parties from whom impugned purchases claimed to have been made and which have been treated as bogus, were appearing as Hawala dealers/parties on the website of Sales Tax Department, Govt. of Maharashtra. The Sales Tax Department, Govt. of Maharashtra after extensive inquiries and investigation has declared said parties under consideration as Hawala Dealer . During the course of investigation it was established that the above referred parties have not done any business as well as there was no actual delivery of goods to the purchase parties. The said parties were not traceable at given address. Based on the details like deposition, affidavit, enquiry report statement etc. received from the Sales Tax Department through DGIT(Inv.), the Ld. AG held that these details clearly establish that the parties/concerns under consideration were providing bogus bills without any actual delivery of goods. 7.4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 31-12-2008 were that assessee individual is in the business of trading in steel on wholesale basis. It may not be out of place to mention that Gross Profit of ₹ 7,42,524/- on sale of ₹ 3,04,52,701/- was declared having GP rate at 2.43% as against the GP of the immediate past year at 3.56%. An intimation was received by the Assessing Officer from DDIT (Inv.)-I, Baroda. According to the said intimation, during the course of verification of banking transactions in the case of Shri Amratbhai Poonambhai Prajapati, Prop of Bhavna Trading Co. Bhagyodaya Enterprises, Shri Kantilal Man gilal Shaarma, Prop of Miakshi Enterprises and Shri Jayantilal Man gilal S,harma, Prop of Arun Industrial Corporation and as per the admission in their statements recorded on oath, it was found that no sales were made by them to any party. It was intimated that those parties were simply issuing sale bills against those sales bills they were receiving dalali . The modus operandi was that on issuance of sales bills the amount of cheque was received and on encashment of the said cheque after deducting dalali the balance amount was withdrawn in cash and returned to the respective parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort to controvert the finding recorded by the DDIT (Investigation) and it made no efforts to produce the seller parties on the other hand it claimed that it is not his responsibility to produce the seller. It is a settled law that onus is on the assessee to establish the genuineness of the purchase. The assessee has produced various evidence with regard to the receipt of the goods by it, it. Stock register, receipt of weigh-bride for weighment of goods purchased by the assessee, octroi receipt of the payment of octroi duty etc. After considering the entire material, we are of the opinion that the assessee did not purchase the goods from the parties mentioned in the sales bill. At the same time, it did purchase the goods from some other suppliers, may be without bill. Therefore, purchase rate as mentioned in the alleged sales bill cannot be accepted. Any person indulging in the practice of purchasing goods from the grey market and obtaining bogus bills of some other parties, would do so for getting some benefit. But what would be the magnitude of the benefit would depend upon facts of each case. In the case of Vijay Proteins, ITAT held that such benefit to be 25% and therefore susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justification to interfere with the order of the CIT(A) in this regard. The same is sustained. Likewise, in another appeal decided by /TAT Ahmedabad bench. D in the case of Smt. Sallandevi B Jain vs. ITO in ITA No.609/Ahd/2009 A.Y. 2005-06 order dated 13-01-2012. Again it was held that in respect of bogus purchases the addition is to be restricted to 12.5%, relevant para-7.1 reproduced below:- 7.1 Considering the facts and circumstances of the case and the findings of the Id. AO and following the ratio of the decision in the case of Vijay Proteins (supra) and in the case of M/s. Bholanath Ply Fab P. Ltd. -vs- ITO in ITA No.137/Ahd/2009 and M/s. Raj Exports -vs- ITO in ITA No.2801/Ahd/2008, relied on by the Id. A.R., we restrict the addition to 12.5% of the bogus purchase made by the assessee. Thus, 12.5% of ₹ 12,86,373/- i.e. ₹ 1,60,797/- is added to the income of the as instead of the addition of ₹ 12,86,373/- added by the Ld. AO and confirmed by the Ld. CIT(A). The Id. AO is hereby directed to make addition, as indicated above. Thus, this ground of the assessee is partly allowed. 7. Having heard the submissions of both sides, we have been inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation from the supplier that the goods where indeed supplied to the appellant. It is an established fact that the onus lies on the appellant to prove that the purchases are genuine. The appellant has made the payments in cheque and the sales made by the appellant have been accepted in toto by the Assessing Officer. Hence, it is to be presumed that though the bills made have been given by MIs. Bhavna Trading Co., MIs. Minakshi Enterprises and MIs. Arun Industrial Corporation the actual purchases have not been made for them. It can, therefore, be concluded that the appellant has made purchases from persons in the open market. Taking into account all the re)pvant facts of the case I hold that 30 per cent of the purchases cost would be a reasonable amount to be confirmed, to cover the profits of the appellant. Hence, the addition to the extent of ₹ 12,3 1,471 is confirmed and the balance of ₹ 28,73,432 is directed to be deleted. 5. We are broadly in agreement with the reasoning adopted by the Commissioner (Appeals) with respect to the nature of disputed purchases of steel. It may be that the three suppliers from whom the assessee claimed to have purchases the stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 per cent of the total turnover. If the yardstick of 30 per cent, as adopted by the Commissioner (Appeals), is accepted the gross profit rate will be much higher. In essence, the Tribunal only estimated the possible profit out of purchases made through non-genuine parties. No question of law in such estimation would arise. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick can be adopted: 10. In the 'result, the tax appeal is dismissed. 7.4.5 The Hon'ble ITAT, Mumbai vide its order dated 14.12.2016, in the case of Shri Ashwin Purushotam Bajaj in ITA Nos. 4736/Mum/2014 and 5207/Mum/20:14 has adjudicated similar facts/circumstances, as that of in the present case. Therein also the Ld. AO had held that the assessee had made purchases to the tune of ₹ 1,13,44,77/- from allegedly bogus parties as per information received from Sales Tax Department, Government of Maharashtra, who as per Government of Maharashtra web-site are suspicious parties providing accommodation entries and are thus bogus bill giving entities without doing any business. In view of the facts and circumstances of said case, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. observed that the assessee has purchased the material from someone else while bogus bills were organized by these hawala dealers, hence, section 69C of the Act was invoked by the AO and additions were made by the AO. The conclusion of the Id. CIT(A) that the assessee has purchased material from some other dealers but quantitative reconciliation of the stock was duly done by the assessee of the sale and purchase and hence the profit element in this accommodation entries are to be added to the income cannot be faulted. The Id. CIT(A) restricted the addition by estimating GP ratio of 12.5% of ₹ 1,13,44,778/- being purchases from these alleged four accommodation entry providers. We do not find any infirmity in the well reasoned order of the Id. CIT(A) whereby net profit was estimated which was a reasonable estimation made by learned C/T(A) and we sustain/affirm the order of learned CIT(A). In the result, we dismiss both the appeal of the assessee as well of Revenue. We order accordingly. The Hon'ble ITAT, Mumbai vide its order dated 18.01.2017 in the case of Smt. Kiran Navin Dos hi in ITA No. 2601/Mum/2016, under similar circumstances, where the Assessing Officer had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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