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TMI Blog2022 (11) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... rs (P.) Ltd. (supra), we do not find any infirmity in the reopening. This ground No.1 of assessees appeal is dismissed. Bogus purchases - As neither the books of assessee was rejected nor the sales of assessee is disputed. The Assessing Officer while passing the assessment order treated the recorded nature of business of assessee trading . In trading, the sales are not possible in absence of purchase. In our view if there is allegation of bogus purchases and the AOmade the addition on the basis of third party information without disputing the sales of assessee and without rejecting the books of account of assessee, though the assessee could not fully substantiate the genuineness of such purchase, the entire disallowance of aggregate of purchase is not justified. In such circumstances to avoid the possibility of revenue leakage, only profit element in such purchase may be disallowed. AO has nowhere disputed the sales of assessee. In such circumstances a reasonable and adhock disallowance would be sufficient to avoid the possibility of revenue leakage. Considering the facts and circumstances of the case we are of the view that @ 10% of aggregate of purchase would be sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from M/s Prakash Trading Corporation, M/s Shankheshwar Sales Corporation and M/s Shree Keshar Impex Metal Pvt.Ltd. as bogus purchases. 3. The ld. CIT(A) has erred in law and on the facts in treating the purchase as bogus purchase ignoring the fact that genuineness of corresponding sale has not been doubted by the ld. AO. 4. Alternatively and without prejudice, only a token and not the whole of the purchase ought to have been disallowed. 5. The ld. CIT(A) ought to have appreciated that the ld. AO has erred in law and on the facts of the case in making addition of Rs.36,23,091/-by holding that carried forward loss of Rs,.19,21,262/- was not available for set off and balance income of Rs.17,01,829/- after setting off the business loss and alleged excess carried forward loss of Rs.19,21,262/- are income of the appellant for the year under consideration. 6. Both the power authorities have passed the orders without properly appreciating the facts and that they further erred in grossly ignoring various submission, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 1,17,72,828/- 2 Prakash Trading Corporation 22,13,786/- 3 Shree Keshar Impex Metals Private Limited 9,94,906/- total 1,49,81,520/- 4. The Assessing Officer after recording the details of bogus purchase and modus operandi of hawala operator and referring the contents of affidavit, which was filed by such entry provider before Sales Tax Department Government of Maharashtra, noted that such entry provider admitted that they have not made any genuine transaction and issued bills to the parties on commission basis @ 0.05% of bill amount. In order to verify the genuineness of the parties, the Assessing Officer issued notice under section 133(6) for seeking certain information, however, the notice was returned back unserved. 5. On the basis of his observation and investigation carried out by Assessing Officer, issued show cause to the assessee and contents of which is recorded in para-4.1 of the assessment order, wherein the Assessing Officer show caused as to why the purchases should not be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made through banking channels, if the payments were returned in cash to the assessee was never verified by the Assessing Officer. The assessee has paid value added tax (VAT) on all the purchase including on the purchases treated by Assessing Officer as bogus. The assessee relied on the various case law on the ratio of that where the supplier was declared as a hawala and the assessee proved the purchases by furnishing necessary documents, more particularly that payments were made through account payee cheque, highlighting the bank statement and the Assessing Officer has not conducted any independent inquiry and no opportunity to cross-examination of such party was given, no addition can be made. 7. The Ld. CIT(A) after considering the submission of assessee and the assessment order held that the supplier in his statement accepted about bogus transactions. The statement of Vikram S Chaudhary, proprietor of Shankheshwar Sales Corporation and Prakash Trading Company was recorded and in his affidavit filed by him, he confirmed transaction of purchases as bogus transaction. The Assessing Officer reproduced all these documents in the assessment order. The Ld. CIT(A) held that Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of assessee submitted that the assessee is not providing information and necessary document. The Ld. AR for the assessee also submitted that assessee was suffering loss and the financial institutions i.e., banker of the assessee has initiated recovery proceedings against the assessee. The business premises of assessee was also attacked by the banker of assessee under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFESI Act). The Ld. AR for the assessee also submitted that the creditors of the assessee also initiated proceedings before National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code for liquidation. After making all such submissions, the ld AR for the assessee requested to seek discharge from the hearing and submitted that he has already informed the consequences to the official of assessee as well as to their instructed Chartered Accountant that in absence of any evidence and information he is unable to pursue all the appeals. All such facts brought to the notice of this Tribunal was recorded in various order sheets including in order sheet entry dated 31.01.2022, 30.05.2022, 31.08.2022 and 18.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have considered the submission of Ld. CIT-DR for the Revenue and perused the orders of lower authorities carefully. Ground No. 1 relates to validity of reopening. We find that case of assessee was reopened under section 147 on the basis of information received from Sales Tax Department, Mumbai that assessee is one of the beneficiary of bogus purchases from entry provider. The Assessing Officer in the assessment order has extracted the statement of such hawala operator as well as copy of their affidavit filed before sales tax authorities Mumbai. On the basis of such specific information, the assessing officer reopened the case of assessee after recording his satisfaction that income of the assessee has escaped assessment. Before Ld. CIT(A) no specific submission was made against such re-opening, no doubt the assessee has challenged the validity of reopening before the Ld. CIT(A). The Ld. CIT(A) in his categorical finding held that assessee has not made any specific submission on reopening. It was also held that information received from Sales Tax Department is sufficient to lead to the believe that income of ae is escaped assessment. We find that Hon'ble jurisdictional High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such circumstances a reasonable and adhock disallowance would be sufficient to avoid the possibility of revenue leakage. Considering the facts and circumstances of the case we are of the view that @ 10% of aggregate of purchase would be sufficient to avoid the possibility of revenue leakage. 14. In view of the aforesaid factual discussion, the ground Nos. 2 to 4 of assessee s appeal are partly allowed and necessary computation to follow as per law. 15. Ground No.5 relates to addition on account of disallowance of carry forward loss / unabsorbed business loss. We find that while filing the appeal before Ld. CIT(A) no such ground of appeal was raised. Therefore, thereby the assessee has raised new and additional Ground of appeal. No application for admission of additional grounds of appeal is filed before Tribunal. The addition based on factual appreciation of fact, in our view, once the assessee has not raised such ground of appeal before ld CIT(A)/ FAA, the assessee is now precluded to raise such ground of appeal before Tribunal. Thus ground of assessees appeal is dismissed. 16. Grounds No.6 to 8 are general in nature and do not require any adjudication. 17. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o delete addition of commission payment. 24. In the result, this appeal is partly allowed. 25. Now we shall take up ITA No. 135/Srt/2018 for AY 2011-12 (assessment order under section 143(3) r.w.s 147 dated 31.03.2016). 26. The case of assessee for AY 2011-12 was reopened under section 147 on the basis of information that the assessee has availed bogus purchase entry from hawala trader namely Shreyansh Corporation and Pavitra Traders of Mumbai (same parties who were involved some other years). The assessee officer after granting opportunity to the assessee and rejecting the books of accounts of assessee and made addition of 100% purchases shown from such hawala party. The assessee has shown purchases of Rs. 50,30,508/-, hence, the assessing officer added the entire amount of to the income of assesse. The assessing officer also made addition of commissions payment @ 0.05% of the quantum of bill amount. The assessing officer thereby worked out the addition of Rs. 2,515/- while passing the assessment order under section 143(3) r.w.s 147 on 31.03.2016. On appeal before ld CIT(A), both the additions were upheld by ld CIT(A). 27. Considering the facts that on similar disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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