9911796707
TMI Blog2022 (5) TMI 1642X X X X Extracts X X X X X X X X Extracts X X X X ..... ng but bogus purchases managed through bogus bills? 2. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in restricting the addition up to Rs. 50,21,287/ out of total addition of Rs 4,18,44,062/ when there was no any actual purchases made from bogus dealers and only cheques were issued by the assessee in the name of bogus dealers followed by immediate cash withdrawal from their bank accounts, thereby coloring the transaction as genuine? 3. Whether on points of law and on facts & circumstances of the case, the Ld CIT(A) was justified in ignoring the statement of the assessee recorded on oath u/s 131 of the IT. Act who, in confrontation of the statements of the brokers namely Shri Sanjay Sharma and Shri Kamlesh. Keshrarwani, admitted that bogus purchases were made from the dummy concerns namely Shri Dalvirnder Singh Bagal and others?" 4. Whether on points of law and on points of facts & circumstances of the case, the Ld. CIT(A) having concurrent powers of the AO u/s. 254(4) of the Act, was justified in deletion the addition of Rs. 3,68,22,775/- out of total addition made by the AO as the assessee could not substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be pertinent to mention here that all these bogus firm's operators (brokers and entry providers) have admitted on oath at the time of their statement recorded u/s 131 of the IT Act that they never owned or operated any godowns or mills or never owned any stock in order to carry out any sale and purchase of goods. Their only work was to provide bogus bills to rice traders and millers. 4.2 In their statements, it was categorically admitted that they acted as an intermediary in arranging the bogus sale and purchase bills between the parties without actual delivery of goods. It was revealed from their statements that the modus operandi of these firms is to provide bogus purchase bills. Brokers Shri Sanjay Sharma, Shri Aditya Sharma, Shri Kamlesh Kesharwani, Shri Ghanshyam Rijwani, Shri Narad Sahu and others have stated on oath that they provided bogus entries or bogus bills to various rice millers in lieu of which they received commission income only. It was stated that after receiving the payment from the rice millers in their respective bank accounts, the same were withdrawn in cash on the same day. Later on, the cash withdrawn was given back to these millers after deducting thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased broken and only accommodate the bogus bills from the above suspicious dealer. The transaction was supported by proper bills. The purchase bills of venders contained TIN number of the venders. The purchase bills of the vendor is supported by Mandi Anugya which has deposited in Mandi samait. The payments were made through banking channels. The material purchases have been recorded in sock record. The broken rice purchased from the parties including the so-called suspicious parties has been sold to various parties. All the sales proceeds are received through banking channels. The assessee maintains day to day stock register. The sales were affected by the assessee out of the stock purchased from the above dealers. It is obvious that first purchase was made and then these were sold. It is an elementary rule of accountancy as well as of taxation laws that profit from business cannot ascertain without deducing cost of purchase from sales/otherwise it could amount to levy of income tax on gross receipts or on sales. The assessee has also filed an affidavit dated 26/12/2016. The affidavit filed by the assessee is not acceptable because the assessee (including two other rice millers) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the payment has been made by cheque and therefore the purchases are genuine. This alibi of payment in cheque cannot be accepted when there is no evidence regarding actual supply of material. Payment through banking channel in itself cannot be complete evidence to prove that the purchases are genuine. Withdrawals have been made from bank accounts through bearer cheques in cash by various persons. It doesn't appear from the kind of withdrawal that these were made for purchase of material from supplier companies like Indian Oil, BPCL etc. When the purchase by Shri Balaji Marketing has not been established, sale by the same to the assessee cannot be accepted. Although the purchases made by the assessee is doubtful but the same cannot be said about sale. Assessee has shown sale of Rs. 49.17 which has not been doubted. In AY 2013-14 on a sale of Rs. 25.44 Crores, GP of 2.83% was shown. In this year on a sale of Rs. 49.17 crores, GP of 2.16% has been shown. In quantity terms assessee has sold 315803.67 quintal broken rice. When the sale of 315803 qtl broken rice and small quantity of paddy and other items with Rs. 49.17 crores has been accepted, before treating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your query why the same be not treated u/s 69C. 1 That the assessee is in the business of Rice Milling and trading activity and has made purchases and sales in regular course of business. That the assessee has produced all books of accounts, vouchers Bank Accounts, purchase ledger, sale ledger, cash book and ledger accounts, purchase, sale bills, Stock Register etc for your verification. 2 The assessee has made total broken purchase of Rs. 47,07,70,051.00 out of which your honor pointed out that the name of some selling dealer is placed on the purchase list submitted on 28.11.2016 as per Annexure "11-44" to "11-47" amounting to Rs. 16,69,05,000.00 as a 'suspicious dealer i.e. a person who is suspected for issuing fake bills without selling the goods. 3 We are enclosing herewith the following evidences to prove the genuineness of the transaction and your ready verification of the same. 4. Purchase of materials: i) The transactions were supported by proper purchase bill which were produced before your honor for verification and it is verifiable. ii) The purchase bills of the vendor contained TIN numbers of the vendors. (The TIN No. of the so calle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... priate statutory authorities. v. The purchases are either reflected as sales or kept as closing stock only. All the quantitative details are properly and completely maintained by the assessee and verifiable also from the records. It is submitted that purchases cannot be termed as bogus when sales are genuine and real. vi. The assessee has not manufactured rice from paddy during the year and only undertaken trading activity. Your honour should appreciate that there is no scope for any adjustment in quantitative details. 6. Conclusion i. Attention to your good-self also invited to the facts that Assessment order u/s. 143(3) pertaining to Assessment year 2013-2014 was also passed by your honor on 17.02.2016. (Copy of the Asst Order Attached). Your honor considered the quantity details and fall in G.P. Ratio and N.P. Ratio. The quantitative details as well as purchase have been accepted by your honor and trading results have also been accepted. ii. The Profitability of the Assessee since last three Assessment year are tabulated as under Particulars A.Y 2012-13 A.Y 2013-14 A.Y 2014-15 Sales 77,523,395 254,480,514 491,750,163 Increase in Sales from last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
