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TMI Blog2023 (7) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... done the delay by moving an application supported with an affidavit that the appellant Shri Bhavesh Punmaji Devasi (hereinafter referred to as the assessee ) had filed an appeal against the assessment order in form 35 before the Ld. Commissioner of Income Tax (Appeals)-35 [hereinafter referred to as the Ld. CIT(A)], but the consultant of the assessee has neither attended the appeal before the Ld. CIT(A) nor informed the assessee to make some alternate arrangements and consequently the Ld. CIT(A) got annoyed and decided the appeal on 07.08.2019 by making 100% addition of bogus purchases as against addition of 12.5% made by the Assessing Officer (AO) on the alleged bogus purchases that all the papers/bills were in the possession of previous tax consultant who looked after the income tax matters of the assessee and unfortunately due to some personal reasons he was out of town so the assessee could not get the necessary papers to prefer the appeal. 2. However, on the other hand, the Ld. D.R. for the Revenue opposed the application for condonation of delay on the ground that the late filing of appeals in this case is apparently malafide due to callous attitude of the assessee and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n petition, we are of the view that in the interest of substantial justice, the assessee's prayer for condonation should succeed. The reasons explained for filing the appeal beyond the due date is genuine and convincing. Therefore, we condone the delay in filing the appeal and appeal is admitted for adjudication (Order copy enclosed). GROUND II Re-opening u/s 147 of the Income Tax Act, 1961: The issue of notice was bad in law and your appellant objected the same during assessment proceedings. The action of the Ld. A.O. was bad in law as there were drastic change in the provisions of the Act. We are quoting from the Hon'ble Apex Court decision in the matter of CIVIL APPEAL NOS.2009-2011 OF 2003 Commissioner of Income Tax, Delhi Vs M/s. Kelvinator of India Limited. In view of Supra, appellant request to dismiss the proceedings initiated by the Ld. A.O. and CIT-A. 2. On the facts of the case the learned CIT (A) has erred in not granting benefit of proviso to section 40(a)(ia) when the copy of ITR and duly audited accounts which included receipts from appellant were submitted during the proceedings. GROUND III To Delete the alleged a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L INDUSTIRES 1026230 6 VIDHI METAL INDUSTRIES 584503 7 LITTLE WORLD TRADE IMPEX PVT LTD 567051 8 REGISTHAN META. (INDIA) 721266 9 APOLLO METALS 769039 TOTAL 58f69,921/- 7. Declining the contentions raised by the assessee that he has made purchases to comply with the VAT provisions and make payment accordingly which fact is proved from TAN and VAT number supported with bank accounts which proved the identity of the supplier and as such purchases were not bogus, the AO proceeded to make an addition of Rs. 7,33,740/- to the business income of the assessee equivalent to 12.5% of Rs. 58,69,921/-, unproved purchases and thereby framed the assessment under section 143(3) read with section 147 of the Act. 8. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has dismissed the appeal ex-parte by making enhancement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing findings: 4. Having considered the memo of Appeal and the Orders passed by AO / CIT(A) and the Order of ITAT, the only issue that comes up for consideration is with respect to the extent of ad-hoc disallowance to be sustained with respect to bogus purchases. The AO has observed 100% of the purchase value to be added to the income of Assessee, the CIT(A) has said it should be 15% and ITAT has said it should be 10%. First of all, this would be an issue which requires evidence to be led to determine what would be the actual profit margin in the business that Assessee was carrying on and the matter of calculations by the concerned authority. According to the Tribunal, in all such similar cases, it is ranged between 5% to 12.5% as reasonable estimation of profit element embedded in the bogus purchase when material consumption factor do not show abnormal deviation. 5. Whether the purchases were bogus or whether the parties from whom such purchases were allegedly made were bogus was essentially a question of fact. When the Tribunal has concluded that the assessee did make the purchase, as a natural corollary not the entire amount covered by such purchase but the profit e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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