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TMI Blog2019 (6) TMI 1722X X X X Extracts X X X X X X X X Extracts X X X X ..... y bringing the gross profit rate on such bogus purchases at the same rate as that of the other genuine purchases. - Shri Shamim Yahya (AM) For the Assessee : Shri Sunil Hirawat. For the Department : Shri Chaitanya Anjaria. ORDER This is an appeal by the assessee wherein the assessee is aggrieved that the learned CIT(A) has erred in sustaining 5% percent disallowance on account of bogus purchases amounting to Rs. 61,060/-. 2. The assessing officer in this case has made 8% addition on account of bogus purchase. 3. Upon assessee s appeal Id CIT(A) reduced the same to 5%. Against above order assessee is in appeal before the ITAT. I have heard both the counsel and perused the records. 4. Upon careful consideration I find that assessee has prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases. The observation of the honourable High Court is reproduced as under: 1. All these appeals arise out of common Judgment of the Income Tax Appellate Tribunal. The facts in all these appeals being same, we make it from ITXA No. 1004 of 2016. The revenue-appellant has raised following questions for our consideration (a) Whether on the facts and in the circumstances of the case and in law, the Hon ble ITAT was justified in not confirming the addition made by the Assessing Officer on account of bogus purchases shown to have been made through hawala transactions from certain parties who were only providing accommodation sale bills? (b) Whether on the facts and in the circumstances of the case and in law, where evidently no purchases were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal before the Commissioner of Appeals who accepted the factum of purchases being bogus. However, he compared the purchases and sales statement of the assessee and observed that the department had accepted the sale, and therefore, there was no reason to reject the purchases, because without purchases there cannot be sales. He, therefore, held that under these circumstances A.O. was not correct in adding the entire amount of purchases as the assessee s income. He, therefore, deleted the addition refreshing it to 10% of the purchase amount. He also directed the A.O. to make addition to the extent of difference between the gross profit rate as per the books of accounts on undisputed purchases and gross profit on sales relating to the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well. On consideration of the matter, we find that the facts of the present case are identical to those of M/s Indian Woolen Carpet Factory (supra) or M/s Vijay Proteins Ltd. In the present case the Tribunal has categorically observed that the assessee had shown bogus purchases amounting to Rs.2,92,93,288/- and taxing only 25 % of these bogus claim goes against the principles of Sections 68 and 69C of the Income Tax Act. The entire purchases shown on the basis of fictitious invoices have been debited in the trading account since the transaction has been found to be bogus. The Tribunal having once come to a categorical finding that the amount of Rs.2,92,93,288/- represented alleged purchases from bogus suppliers it was not incumbent on it t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- So far as the question regarding addition of Rs. 3,70,78,125/- as gross profit on sales of Rs. 37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same pric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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