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TMI Blog2023 (5) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... e consumption/sales, the motive behind obtaining bogus bills thus, appears to be inflation of purchase price so as to suppress true profits.There is nothing in the order of the Ld. CIT(A) requiring our intervention. Accordingly, we reject these grounds of the assessee in all the AYs involved. X X X X Extracts X X X X X X X X Extracts X X X X ..... Group on 29.10.2013 and the assessee company was also covered in the search. Notice under section 153A of the Act was issued on 23.12.2014. In response thereto, the assessee filed return on 30.09.2015 declaring income of Rs. 9,34,17,240/-; Rs. 19,37,86,600/-; Rs. 70,34,86,650/- for AY 2010-11, AY 2011-12 and AY 2013-14 respectively. For the AY 2014-15, notice under section 142(1) of the Act was issued on 23.12.2014. The assessee submitted a copy of return filed on 30.11.2014 declaring income of Rs. 39,22,37,340/-. 5. During assessment proceedings, the Ld. Assessing Officer ("AO") found that the assessee made purchases from the following parties in AY 2010-11, 2011-12, 2013-14 and 2014-15 which according to him remained unverified:- S. No. Name of the party AY 2010-11 Rs. in Lakhs AY 2011-12 Rs. in Lakhs AY 2013-14 Rs. in Lakhs AY 2014-15 Rs. in Lakhs 1. M/s. Baba Traders 231.41 96.5 2. M/s. Royal Enterprises 443.75 198.25 3. M/s. Shalu Enterprises 219.01 4. M/s. Star Trading Co. 343.61 5. Rohit Enterprises 0.56 0.11 6. Amit Builder 56.54 7. Arihant 745.68 Total 1294.34 294.75 0.56 745.79 5.1. Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that if there is no incriminating material found during the search, as per the ratio of Hon'ble Delhi High Court laid down in the cases of CIT v. Kabul Chawla [2016], 380 ITR 573 (Delhi) and Pr. CIT V. Meeta Gutgutia [2017] 395 ITR 526 (Delhi) assumption of jurisdiction is not possible u/s 153A. However, whether any incriminating material related to a particular assessment year was unearthed during the search, is a pure question of fact. This question is to be decided in each and every case based on peculiar facts and circumstances of that very case. In the present case, the AO has clearly stated that bills, vouchers related to these parties were not found during the search. It was stated that the same would be produced later on (copies of these bills were submitted as additional evidences before the undersigned but as stated above the same were not admitted). Also, during the post search enquiries, these parties could not be located. Therefore, it is difficult to agree with the preposition put forward by the AR- The material found during the search need not, always, to be positive. Even, negative findings in certain cases would constitute, "incriminating material". The non-genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected. 11. Ground No. 2 and 3 in AY 2010-11, Ground No. 1 and 2 in AY 2011- 12, Ground No. 1 and 2 in AY 2013-14 and Ground No. 1 and 2 in AY 2014- 15 relate to confirmation of addition by the Ld. CIT(A) to the extent of Rs. Rs. 1,61,84,376/-; Rs. 36,84,376/-; Rs. 56,421/- and Rs. 93,22,352/- in AY 2010-11, 2011-12, 2013-14 and 2014-15 respectively. The Ld. CIT(A) took notice of the findings given by the Ld. AO in the assessment order, considered the contentions raised by the assessee before him, distinguished the decisions relied upon by the assessee on facts and reached the conclusion that it is a case of inflation of purchase price so as to suppress true profits and accordingly estimated such profits @12.5% of the alleged bogus purchases made by the assessee in the AYs under consideration. The findings of the Ld. CIT(A) are contained in para 6.21 to 6.27 of his appellate order which we hereunder reproduce:- "6.21 To sum up, I would like to quote the landmark case of State Bank of India v. S.K. Sharma AIR 1996 SC 364 where the Hon'ble Apex Court observed : "Justice means justice between the parties. The interest of justice equally demand that the guilty should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties shown in the accounts, but from other sources. In that view of the matter, the Tribunal was of the opinion that not the entire amount, but the profit margin embedded in such amount would be subjected to tax. The Tribunal relied on its 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 themselves mere bogus or whether the parties from whom such purchases mere allegedly made mere bogus is essentially a question of fact. The Tribunal having examined the evidence on record came to the conclusion that the assessee did purchase the cloth and sell the finished 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 Oilcake Industries vs. CIT (2009) 316 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom grey market, partially sustained the addition as probable profit of the assessee. Tire Tribunal however, partly sustained the addition. Taking into account the above facts, the Hon'ble Gujarat High Court held that since the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded in such purchases could be added to the assessee's income and as such no question of law arose in such estimation. While arriving at tine above conclusion, the Hon'ble Court also relied on the decision in tine case of Vijay M. Mistry Construction Ltd. 355 ITR 498 (Guj) and further approved the decision of Ahmedabad Bench, ITAT in the case of Vijay Proteins 58 ITD 428. 6.26 In the case of Vijay Proteins (supra), the Hon'ble ITAT was seized with a case of bogus suppliers of oil cakes where 33 parties were found to be bogus by the departmental authorities even though payments were made to the said parties by cross cheques and in fact the A.O. 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 allegedly procured but these we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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