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TMI Blog2017 (11) TMI 1941X X X X Extracts X X X X X X X X Extracts X X X X ..... not required to interfere with at this appellate stage. Accordingly, this issue is decided in favour of the revenue against the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchases but the assessee failed to do so, therefore, the peak credit to the tune of ₹ 61,07,205/- in M/s Phenolek Steel & Engg. Co. and peak credited of ₹ 1,02,28,611/- in M/s United Metal Industries amounting to the tune of ₹ 1,63,35,816/- was treated as unexplained expenditure u/s 69C of the Act. Therefore, the same was added to the income of the assessee and the income of the assessee was assessed to the tune of ₹ 1,73,80,520/-. Feeling aggrieved the assessee filed an appeal before the CIT(A) who restricted the addition to the extent of 12.5% therefore, the assessee has filed the present appeal before us. However, the contention of the revenue is that the whole purchase is required to be added to the income of the assessee. ISSUE NO.1:- 5. Under this issue the assessee has challenged the addition to the extent of 12.5% on account of bogus purchase to the tune of ₹ 1,63,35,816/- u/s 69C of the Act. The Assessing Officer raised the addition on account bogus purchase totaling to the tune of ₹ 1,63,44,175/- from six parties namely M/s Avinash Enterprises, M/s Siddhi Vinayaka Steel, M/s Asian Tube Trading, M/s Chanchal Tube Corporation, M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt statement must be considered real until it was shown that there were reasons to believe that apparent was not the real, in a case where an authority relied on self-serving recitals in documents, it was for the party to establish the proof of those recitals; the taxing authorities were entitled to look into the surrounding circumstances to find out reality of such recitals. 5.6 It is also a settled legal proposition that if no evidence is given by the party on whom the burden is cast, the issue must be found against him. Therefore, onus is always on a person who asserts a proposition or fact and in the instant case, the appellant has miserably failed to lead evidence and hence, onus is a determining factor. The Hon'ble Supreme Court, in the case of Chuharmal Y. CIT [1988] 172 ITR 250 138 Taxman 190 highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fettered, by technical rules of evidence, as held by the Hon'ble Supreme Court in the case of Dhakeswan Cotton Mills Ltd. V CIT [1954] 26 JTR 775, The Hon'ble Supreme Court, in the case of Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btaining bogus bills dismissed the assesses Writ Petition filed against notice u/S. 148 of the Act. 5.9 The: appellant in his submissions also relied upon the Hon'ble JTAT, Mumba, decision in the case of Rajeev Kalathit vs. DCIT ITA No 6727/M/2012. In the case of Rajeev Hon'ble Tribunal deleted the addition on the ground that investigation was not taken to the logical end by calling for the details and verifying them properly Apart from that transportation of goods were not verified properly that case in view of the same ITAT came to the conduct of that sufficient evidences are not. thereon file to endorse the view taken by the AO and the order of the FM was confirmed However, in the present case, AO called for and verified all the details and proper investigation was made which was discussed in the assessment order in detail by the Id. AO. Apart from that the appellant could not prove that the transportation of the goods was realty took place from the six parties, despite given a specific opportunity by the AU. Thus, all the cases retied upon by the appe1tant for relief won't come to the rescue of the appellant, since the facts and circumstances in the present case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat as a result of search on the assessee-company, the purchases totalling to ₹ 4,37,048 were not found recorded in the seized books of account of the assessee-company. No 511/render was made on behalf of the company by any of the directors of the assessee-company. The surrender was made by Shri Mahesh Toshniwal, one of the directors of the company in his individual and not an behalf of the assessee-company and the sume was considered in his personal assessment Under the law, the company is a separate juridical person. The surrender made by 5/in Mahesh Toshniwal, in his individual capacity is not binding on the assessee-company. Shri Mahesh Toshniwal in his personal statement, has nowhere stated that the surrender was made on behalf of the assessee-company. We also find that even in the return filed in response to a notice under section 148, the assessee-company did not include the said amount of bogus purchases. The assessee-company has not placed any mater/al as to show that the said purchases, in fact, belong to S/in Mahesh Toshniwal and not the assessee-company. Linden these drcumgta7ce5, we do not find any merit in the plea of the learned authorised representative that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 2009 316 ITR 274 (GUJ), it was held as under Thus, it is apparent that both the Commissioner (Appeals) and the Tribunal have concurrently accepted the finding of the Assessing Officer that the apparent sellers who had issued sale bills were not traceable. That goads were received from the patties other than the person who had issued bills for such goods. Though the purchases are to have been made by making payment thereof by account payee cheques, the cheques have been deposited in hank account ostensibly in the name of the apparent sellers, thereafter the entire amounts have been withdrawn by bearer cheques and there is no trace or identity of the person. withdrawing the amount from the bank accounts. In the light of the aforesaid nature of evidence it i5 not possible is no material to dislodge such finding The is not whether die purchase pace effect& in the books of accountnatd7es-the purchase price stated to have been to other persons. The issue is whatever the purchase price paid by the ase5see is reflected as rejected by the recipient. The assessee by set of evidence available on record, made itposib1e for the for the purpose of as to whether the payment5 made by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the entire amount, but the profit margin embedded in such amount would be subjected to tax. The Tribunal relied on it earlier decision in the case of Sanket Steel Traders vs. ITO [IT appeal Nos. 2801 & 2937 (Ahd) of 2008, dated 20-05-2011] and also made reference to the Tribunal's decision in the case of Vijay Proteins Ltd. vs. Asstt. CIT [1996] 58 ITD 428 (Ahd) On appeal by the Department, the Hon'ble Gujarat High Court held as follows: 'We are of the opinion that the Tribunal committed no error. Whether the purchases ffiemsehe5 were bogus or whether the patties from whom such purchases were allegedly made were bogus is essentially a questfol7 of fact. The Tribunal having examined the evidence on record came to the conclusion that the assessee did purchase the cloth and sell the fin/shed goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. This was the view of this Court in the case of Sanjay 01/cake Jndu5tries vs. QY (2009) 316 IT!'? 274 (Guj). Such decision is also followed by this Court in a judgment dated August16, 2011, in Tax Appeal No, 67 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Ltd. 355 ITR 498 (Gui) and further approved the decision of Ahmedabad Bench, ITAT in the case of Vijay Proteins 58 ITD 428. 518 In the case of Vijay Proteins (supra). the Hon'ble ITAT was seized Without suppliers of oil cakes where 33 parties were found to be bogus oy the departmental authorities even though payments were made to the said parties by cross cheques and in fact the AD. in that case had brought adequate material on record to prove that the cross cheques had not been given to parties from whom supplies were allege procured but these were encashed from a bank account in the. name of another entity, possibly hawala dealer. Subsequently, the, money deposited In that account was withdrawn in cash almost on the same day. The Tribunal however, held that if the purchases were made from open market without insisting for genuine, the suppliers may be willing to sell the project at a in less rate :2S compared to a rate Which they may charge in which the dealer to give genuine sale disallowance n respect of that sale Keeping all such factors in mind, the Tribunal estimated an element of profit. percentage of the overall purchase price accounted for in the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly- Since the It's of the assessee case are identical, we respectfully following decision of the ITAT. direct the Assessing Officer 12.5% of the purchases made during the year under consideration. 5.20 As stated ear1ter,in the present case the Id A 0 $iirnsetf held that the purchases were not bogus though the party from whom then purchase were made by • the appe11nt was round to be bogus and that is the reason for which they were not produced during the assessee merit proceedings. The motive behind obtaining bogus bills thus, appears to be inflation of purchase price so as to suppress true profits. Estimation ranging from 12.5% to 25% has been upheld by the Hon'ble Courts depending upon the nature of the business. As held in the case of Simit P. Sheth (supra) no uniform yardsticks could be applied to estimate the rate of profit and it varies with the nature of business. Taking all the facts into consideration and also taking into the findings of the Hon'ble Courts on this issue, I am of the view that estimation of 17.5% of profit would meet the ends of justice. Therefore, I direct the AO to estimate profit of 17.5% on the total alleged bogus purchases from the si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al purchase is taken as ₹ 86,16,371/-, whereas as per the account copy submitted, the total purchases made during the year is Z 1,05,96,371/- from the said party. AO is directed to re-check the total purchases from all the six parties and adopt the decided percentage of profit net i.e. 12,50/o, as the profit embedded on the purchases made from these parties. Accordingly, Ground Nos. 1 to 6 are partly allowed. 6. Ground No. 7 of the appeal relates to charging of Interest u/s. 234B, 234C and 234D by the Assessing Officer. This ground is consequential in nature as far as the charging of interest under sections 2348/234C and 2340 of the Act is mandatory and not discretionary as held by the Apex Court in the case of Anjuman N Ghaswala reported in (252 ITR 1) and in the case of CIT vs. Hindustan Bulk Carriers (259 1TR 449). For the statistical purpose, this should be taken to be dismissed grounds of appeal. 7. Ground No, 8 of the appeal relates to initiation of penalty proceedings u/s 271(1)(c) of the Act. As far as challenging the initiation of penalty proceedings are concerned this ground of appeal is premature as no penalty has been imposed by the Assessing Officer. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embedded into the purchase to the extent of 12.5% has rightly been taken into consideration to the facts and circumstances of the case. Accordingly, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not required to interfere with at this appellate stage. Accordingly, this issue is decided in favour of the revenue against the assessee. ITA NO.534/M/2016:- 7. The facts of the present case are quite similar to the facts of the case as discussed in ITA. No. 567/M/2016, therefore, there is no need to repeat the same. 8. The revenue has raised the following grounds.:- "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in the confirming addition @ 17.5% of total purchases held as bogus by the AO? 2. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored. 3. The appellant craves leave to amend or alter any ground or add a new ground which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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