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TMI Blog2022 (2) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... chases cannot be considered as bogus since the sales have not been disturbed and some of the parties to whom letters were issued are existing in the given address and no discrepancy was found in the stock at the time of survey and the stock register was tallying with quantitative details, therefore, estimation of commission for the entire purchases, in our opinion, is not justified. At the same time, the conduct of the assessee is not above board. Considering the totality of the facts and circumstances of the case, we are of the considered opinion that lump sum addition of ₹ 50,000/- on estimate basis under the facts and circumstances of the instant case will meet the ends of justice. We hold and direct accordingly. Grounds of appeal number.9 of the assessee is accordingly partly allowed. Addition u/s 69C on account of unexplained expenditure - It is the submission for the Assessee that benefit of telescoping should be available to the assessee on account of addition, if any, in the case of other group concerns as a whole - HELD THAT:- The plea of the assessee, in our opinion, is not acceptable. The assessee can get the telescoping benefit for addition on account of bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 1,90,43,829/- from the following parties during the year under consideration. Party Name Amounts Delite Trading Co. 16,81,502 India Sales Corporation 1,18,63,490 Shakshi Sales 10,50,975 Shivam Trading Company 9,76,016 Jai Shiv Enterprises 34,71,846 Total Purchases 1,90,43,829 2.2. Purchase parties namely M/s Jai Shiv Enterprise, Delite Trading Co. And Ganesh Enterprises are connected with Sh Dalip Kumar, who is an identified accommodation entry provider. Statement of Sh Dalip Kumar was recorded on oath on 10.11.2016 and 17.12.2016in which he admitted that he is the sole proprietor of 18 concerns namely M/s Jai Shiv Enterprises and others. He further admitted that no business activities were carried out by these concerns, no sale/purchase of goods was made by these concerns. All the bank accounts of these concerns were used for providing bogus bills, accommodation e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited before him, the A.O. made addition of ₹ 47,60,957/- being 25% of the purchase price of ₹ 1,90,43,829/- accounted for in the books of account through such fictitious invoices in the name of the bogus parties. Similarly, the A.O. made addition of ₹ 1,04,741/- being commission for arranging such bogus purchases of ₹ 1,90,43,829/-. Thus, the A.O. determined the total income of the assessee at ₹ 72,41,198/- as against the returned income of ₹ 23,75,500/-. 2.4. Before the Ld. CIT(A), the assessee challenged the validity of assessment under section 153A of the I.T. Act, 1961 in absence of any incriminating material. So far as merit of the case is concerned, it was submitted that the purchases were made from the parties through bills/invoices and such items were used in the job work. It was contended that the details of the stock maintained by the assessee are unique to the purchases and to the items used in the job work. It was submitted that the books of account were audited, the payments have been made through banking channels and no discrepancy of stock was found at the time of survey. It was argued that as per books although certain shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search u/ s 132 of the Act for the impugned year. 3. Because the action is being challenged on facts law for completing the assessment u/s 153A having returned wrong findings of fact evidence qua the denial/retraction of the surrendered amount, which is even contested since the quantum and relatability of the amount to the impugned year is not according to the document and material. 4. Because the action is being challenged on facts law for making an disallowance of purchases amounting ₹ 47,60,957/- @2 5% of Purchases amounting ₹ 1,90,43,829/- by rejecting books of accounts u/s 145(2), hence the basis of addition is against the commercial expediency, business exigency and accepted modus operandi of the business and business operations and additionally in the alternative the quantum thereof too is being disputed. 5. Because the action is being challenged on facts and] law for making addition on account of disallowance of purchases amounting ₹ 47,60,957/- on estimation basis (25% of purchases ₹ 1,90,43,829/- ) overlooking and ignoring the Pleadings, Facts, Evidences, Provisions of Act, Principles of law advanced hence unsus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 3.2. However, at the time of hearing, the Learned Counsel for the Assessee did not press the additional ground, for which, the Ld. D.R. has no objection. Accordingly, the additional ground raised by the assessee is dismissed as not pressed . 3.3. Grounds of appeal No.1 and 11 being general in nature are dismissed. 3.4. Learned Counsel for the Assessee did not press grounds of appeal Nos.2 and 3, for which, the Ld. D.R. has no objection. Accordingly, these grounds are dismissed. 3.5. Grounds of appeal Nos.4 to 8 relate to the order of the Ld. CIT(A) in giving part relief out of the addition of ₹ 47,60,957/- being 25% of the bogus purchases of ₹ 1,90,43,829/-. 4. Learned Counsel for the Assessee submitted that the assessee has done 20 types of job work with material during the year in which around 55-60% of material is used to complete the job work services and the same has been verified from the clients of the assessee by the Departmental Inspector. The technical person has given certificate that an amount of 60% of material will be used for job work of the above said works. He submitted that the purchases made by the assessee are bifurca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 09.12.2019. 5. Hon ble Bombay High Court in the case of PCIT vsRishabhdevTachnocable Ltd. in ITA No. 1330 of 2017 dated 10.02.2020. 6. Hon ble Bombay High Court in the case of PCIT vs Pinaki D. Panani in ITA No. 1543 of 2017 dated 08.01.2020. 7. Hon ble Bombay High Court Judgment in the case of PCIT vs Mohommad Haji Adam Co. (2019) 104 CCH 0391 (Mum HC). 8. Hon ble Supreme Court in the case of CIT vs M/s Odean Builders Pvt. in Review Partition (C) Diary No. 22394 of 2019 dated 21.08.2019. 9. Hon ble Supreme Court in the case of PCIT vs Tejua Rohitkumar Kapadia in SLP(C) Diary No. 12670 of 2018 dated 04.05.2018. 4.5. He accordingly submitted that some reasonable profit should be estimated and not the disallowance of 20% of the purchases as held by the Ld. CIT(A). So far as the commission estimated by the A.O. at 0.55% on such purchases are concerned, he submitted that the same is also on the higher side. 5. The Ld. D.R. on the other hand, heavily relied on the order of the Ld. CIT(A) and submitted that when the assessee has admittedly indulged in bogus purchases and the Ld. CIT(A) has already restricted such disallowances to 20% in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in job work shows that these items were tallied. Therefore, it is his submission that disallowance @ 25% of the purchases is highly unjustified and some reasonable profit rate only should be adopted. 6.1. We find some force in the above arguments of the Learned Counsel for the Assessee. It is an admitted fact that the sales declared by the assessee has not been disturbed. The assessment order indicates that letters were served upon certain parties which proves their existence. The books of account were also audited and auditors have not given any adverse remarks. All the payments have been made through banking channels. The assessee had produced the stock register showing relevant entries of the items purchased and issued for consumption in job work and the items were tallying and no discrepancy in the stock was found at the time of survey. Under these circumstances, we are of the considered opinion that disallowance of 20% of the purchases appears to be on the higher side especially when some of the parties to whom letters were issued were served and the payments have been made through banking channel. Considering the totality of the facts and circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the above submissions of the Learned Counsel for the Assessee. 11. After hearing both the sides, we find in the preceding paragraph we have already held that 3% of the total purchases of ₹ 1,90,43,829/- are bogus which comes to ₹ 5,71,314/-. Therefore, the A.O. is directed to allow the benefit of telescoping out of the said income to the assessee for meeting the expenses towards commission expenses. Grounds of appeal number.10 of the assessee is accordingly allowed. 12. In the result, ITA.No.9145/Del./2019 of the assessee is partly allowed. ITA.No.7187/Del./2019 A.Y. 2012-2013 : 13. The only issue raised by the assessee in the grounds of appeal relates to order of the Ld. CIT(A) in confirming the addition of ₹ 6,41,725/- made by the A.O. under section 69C of the I.T. Act, 1961 on account of unexplained expenditure. 14. Facts of the case, in brief, are that assessee filed the original return of income on 28.07.2012 declaring total income of ₹ 15,92,980/-. In response to notice under section 153A the assessee filed the return on 04.10.2017 declaring the same income as returned earlier at ₹ 15,92,980/-. During the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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