9911796707
TMI Blog2022 (5) TMI 1642X X X X Extracts X X X X X X X X Extracts X X X X ..... k to the file of the assessing officer with a direction to tax the appropriate rate of G. P. which the assessee has adopted for other genuine purchase and sale transactions with this remark the grounds of the revenue is allowed for statistical purposes. At the same time assessee is also directed to submit the correct and full details as may be required by the assessing officer in this matter. Appeal of the revenue is allowed for statistical purposes. - Shri Ravish Sood, Judicial Member And Shri Rathod Kamlesh Jayantbhai, Accountant Member For the Assessee : Shri Ravi Agrawal. For the Revenue : Shri Debashish Lahiri. ORDER PER RATHOD KAMLESH JAYANTBHAI, AM: This appeal is filed by the revenue aggrieved from the order of the Commissioner of Income Tax (Appeal)- I, Raipur [ Here in after referred as Ld. CIT(A) ] for the assessment year 2014-15 dated 26.02.2018. 2. The hearing of the appeal was concluded through audio-visual medium on account of Government guidelines on account of prevalent situation of Covid-19 Pandemic, both the parties have placed their written as well as oral arguments during this online hearing process. 3. The revenue has taken following grounds in this appeal; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby rendering a decision, which is perverse? 7. Whether on points of law and on facts circumstances of the case, the Ld CIT(A) has erred in law by holding the decision in favour of the assessee and against the revenue through there is no nexus between the conclusion of fact and primary fact upon which without conclusion is based? 8. The order of Ld. CIT(A) is erroneous both in law and on facts. 9. Any other ground that may be adduced at the time of hearing. 4. Briefly stated the facts of the case is that a survey operation u/s 133A was conducted in the business premises of Shri Sanjay Sharma, Hanuman Market, Raipur and Shri Kamlesh Keshrwani, Canvassing Agent, Raipur including the premises of the assessee on 15/03/2016. 4.1 The point of inquiry was of bogus bills that required through the broker and entry providers to the rice millers and rice traders. These brokers and entry providers were individuals related to the rice milling and rice trading business. Fake or bogus bills were provided to the rice millers by the brokers himself and through entry providers. Survey action was also carried out in the case of Nagrik Sahakari Bank, Raipur where some of these bank accounts were maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout any transfer of goods. Such dealers indulging in the business of bogus bills and in some cases individuals, as above, have opened multiple firms by different names. 4.4 In view of above facts and categorical admittance, an opportunity was provided to the assessee vide order sheet 07/12/2016 asking to explain that : Survey operation u/s 133A of the Income Tax Act, 1961 have been carried out on 15/03/2016 in the business premises of three Rice millers at Tilda (including the premises of assessee) and two brokers at Raipur by the JCIT, Range-1, Raipur. In the statement recorded on oath stated that they provided bogus entries or bogus bill to various rice millers over the years in lieu of which they received commission. During the investigation it has been established that above named firms are bogus firm from whom you have shown purchases of Rs. 16,73,76,250/-. As per the detailed inquiry it has been established that these firms are only paper firm and providing bogus till to the rice millers. You are therefore required to submit your explanation as and why the amount of Rs. 16,73,76,250/- should not be disallowed u/s 69C of the Income Tax Act, 1961. 4.5 The assessee submitted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This fact is also supported by the statement of bogus suppliers parties who have categorically admitted that they did not own any stock godown. The AO has relied on the decision of Hon'ble ITAT Bench, Ahmadabad in the case of Vijay Proteins Ltd (58 ITD 428). 4.7 As mentioned in the above referred order, the AO made disallowance of 25% of the bogus purchases to the present case. Also, the facts mentioned above reveals that said amount of bogus purchase which leads to rejection of books of account for the specific purpose and for the reasons detailed above, the purchases recorded in the books of account of the assessee amounting to Rs. 167376250/- and out of that bogus purchase AO made disallowance of 25% of such purchase which worked out to Rs. 41844062/- and accordingly added to the total income of the assessee. 5. Aggrieved from the order of the assessing officer, the assessee carried the matter before the ld CIT(A) where in the assessee succeeds partly and got the relief. The relevant finding of the ld. CIT(A) in this regards is as under:- 2.3 Facts being as above, the assessee has obtained bills without any evidence of getting actual delivery of goods debited as purchase. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AO that the payments made were again routed back to the assessee, the addition made by estimating further profit of 12.5% earned by the assessee is not sustainable in law and facts. Keeping in view the totality of facts and circumstances of the case, we are inclined to restrict the addition to the extent of 2% of such purchases. I think on these facts, since the sales has been accepted, it is only logical to treat the purchases as out of the book purchases on which sales must have been effected and add a suitable percentage of such amount to the income of the assessee. GP in current year is 2.16% which is on lower side. On the whole adopting GP 3% on the value of purchase held to be bogus will be justifiable figure. Balance addition is deleted. Rs 50,21,287/- sustained, balance relief. Aggrieved, from the order of the ld. CIT(A) the revenue has filed this appeal contending the findings of the CIT(A) on various grounds as extracted herein above. 6. The ld. AR appearing on behalf of the assessee has reiterated their written submission made before the lower authorities and same is reiterated by ld. AR at the time of personal hearing and the same is also extracted here in be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock has already submitted in our audit report and the same is verifiable from the records produced before your verification. 5. Sales of Materials: i. The broken rice purchased from the parties including the so called suspicious parties had been sold to various parties (as per details statement attached herewith). All the sale proceeds are received through banking channel and these are reflected in the bank statement already submitted and it is verifiable. ii. The Assessee maintained day to day stock register, which clearly shows that the materials purchased were consumed and goods produced, were sold to different parties. The Yield and input output ratio are in line with Past records and even within the year under consideration. iii. The broken rice purchased from the said suspicious parties were lying part of closing, stock as on 31.03.2014 which has considered in closing stock also. (Closing Stock valuation has already submitted on point no. 10 of our reply dated 28.11.2016. In such case there is no impact on profitability of the assessee. iv. All the transactions of purchase and sales were duly recorded in books of account. All these years accounts of the assessee was Audited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-2014. vii) Case Law Copy. viii) Ledger copy of the dealers as pointed out by you as suspicious showing credit for purchase and details of payment by cheque. ix) We are enclosing herewith the certificate in Form No. 26A regarding non deduction of TDS from Magma Fincorp Limited in terms of requirement of Section 201(1). Hope you will find the same in order. If your honor requires any further information/ explanation we shall be glad to furnish the same to you. 7. In addition to the above written submission the ld. AR of the assessee heavily relied upon the decision of Hon ble Bombay High Court in the case of PCIT Vs. Mohmmad Haji Adam Co. in ITA No. 1204 1012 2016. The relevant finding / observation on the issue of bogus purchase is extracted here in below for the sake of brevity 8 In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the findings of the DR] ld. CIT(A) is perverse and the order of the ld. AO be restored based on the detailed findings of the AO and statement of witness recorded for which the cross examination was also given to the assessee and thus he opposed the relief granted by the ld. CIT(A). 9. We have persuaded the facts of the case and also have heard the lengthy arguments of both the counsel. It is undisputed facts that the assessee is indulging in bogus billing activities and at the same time respectfully following the decision of Hon ble Bombay High Court relied upon by the counsel where in it is held that the entire purchase amount of such bogus purchase cannot be added at best the addition limited to the extent of G. P. Rate on purchases at the same rate of the genuine purchase. On being asked about the computation of separate G. P. Rate of these two activities the ld. AR of the assessee has submitted a chart which requires the detailed verification and since the said analyses has not been so far placed by the assessee before lower authorities we restore the matter back to the file of the assessing officer with a direction to tax the appropriate rate of G. P. which the assessee has a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
