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TMI Blog2024 (9) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... e Addl. CIT/ Sr. DR ORDER PER AMARJIT SINGH, AM: The present appeal filed by the assessee is directed against the order dated 13.03.2024 passed by ld. Commissioner of Income Tax (Appeal), NFAC, Delhi for Assessment Year 2009-10. 2 Fact in brief is that assessee has filed return of income relevant to A.Y. 2009-10 on 29.09.2009 declaring total income of Rs. 3,65,690/-. The case of the assessee was reopened u/s 147 of the Act by issuing of notice u/s 148 of the Act on the basis of information received that assessee has availed accommodation entries in the form of purchase bills from various dealers as per the communication received from the Sales Tax Department by the DGIT (Inv.). During the course of assessment proceedings, the assessing officer issued notice u/s 142(1) of the Act to the assessee for proving genuineness of the transactions. However, the AO stated that assessee could not explain the transaction satisfactorily therefore, the entire amount of Rs. 88,98,967/- was treated as unexplained expenditure and added to the total income of the assessee. 3. The assessee filed appeal before the ld. CIT(A). The ld. CIT(A) after relying on the decision of Hon ble Bombay High Court and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussion in para 3.4 to 4 of the assessment order, treated the transactions of the assessee with the parties as accommodation entries. Accordingly, the AO made an addition of Rs 88,98,967/-. 6.0 During the appellate proceedings, hearing notices were issued to file submissions in support of the grounds. After considering the submissions and in the background of the above facts and circumstances, I give my findings. i. To begin with, the primary onus was on the assessee to prove the genuineness of purchases by producing the confirmation parties. Since it was established from the investigation that the parties were bogus entities, the purchases were dubious. ii. Mere payment through banking channels is not sacrosanct. iii. If the seller is found to be non-existent then purchase price can be treated as income. 6.1 It is well settled law that strict rules of evidence do not apply to Income tax proceedings and conclusive proof is also not necessary to arrive at any conclusion or to establish a fact. The AO is entitled to arrive at a conclusion on appreciation of several facts, the cumulative effect whereof may be considered to judge the soundness of the conclusion. It is conceivable that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber of decisions by the various courts, wherein 25% to 100% disallowances of bogus purchases, have been upheld. Some of these are mentioned below: 6.3 100% disallowance of bogus / unverifiable purchases was upheld, in following cases:- 1. CIT Vs. La Medica (2001) 250 ITR 575 (Del) 2. Sri Ganesh Rice Mills Vs. CIT (2007) 294 ITR 316 (All) 3. Khandelwal Trading Co. Vs. ACIT (1996) 55 TTJ (JP) 261 Swetambar Steels Ltd. Vs. ITO 707 / 1075 / 1262 / 1263 / JD (2002) ITAT (Ahd). In the case of Swetambar Steels Ltd. (supra), the Hon ble ITAT, Ahmedabad had confirmed the is allowance of the bogus purchase in entirety stating that the purchases shown from the respective parties were found ingenuine. It was not a matter to be looked into whether the assessee had made purchases from different parties other than the alleged ones. It was also worth mentioning that the appeal against the decision of Hon ble ITAT was not admitted by the Hon ble Gujarat High Court and the assessee had also lost before the Hon ble Supreme Court. So, the decision over the issue had become final. There were judicial decisions wherein the whole amount of bogus purchases was disallowed and the said orders were also con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of bogus/unverifiable purchases has been upheld in following cases: (i) Uniword Telecom Ltd. Vs. Addl. CIT (45 DTR 433) (Delhi ITAT). (ii) ITO Vs. Sunsteel (92 TTJ 1126) (Ahmedabad ITAT). 6.7 In view of the foregoing discussion, the percentage of disallowance of bogus purchases/ accommodation entry must be based on the facts of each case. The same cannot be generalized in every case. The decisions rendered in the cases of Sanjay Oil Cake Industries (supra) and Vijay Protein Ltd. (supra) are however distinguishable on facts since in case of Sanjay Oil Cake Industries, a specific finding was given by the Assessing Officer that purchases were made from the alleged bogus suppliers at higher rate as compared to the other parties. In the case of Vijay Proteins Ltd. (supra), after examining the bank account, it was established that cheques issued to various parties were deposited in one of the accounts, which were found to be owned by the assessee himself but there are no such circumstances in the present case. Moreover, the question whether entire purchases should be disallowed or addition should be restricted to the profits embodied on sale proceeds was answered by Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are held bogus, then it is not correct to tax only 25% of the bogus claims? This is further supported by the fact that in this case also, the AO has categorically and conclusively held that the parties from whom the purchases are shown to be made are bogus purchases as the concerns are providing bogus bills and this finding of the AO has been further strengthened by the findings of the higher appellate authority which is never controverted by Hon'ble ITAT? 6.3 Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in overlooking the fact that addition made by AO based on details of scam unearthed by Sales Tax Department wherein it was established that the assessee had taken bills from bogus parties without actually making purchases from them? 6.4 whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in ignoring that the purchases from bogus parties are debited in P L Account for which the assessee had not submitted any evidences, and the same was not allowable? 6.5 Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in upholding the order of the Ld.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al vide its order dated 03rd May, 2017, dismissed the same. It was held that without purchasing materials and goods, it would not have been possible on the part of the assessee to execute the contract work with the MCGM, which is a Government Authority. It also held that the A.O. had not disputed the turnover of the contract work executed by the assessee and that unless the assessee procured the materials and goods, if not from the declared sources but from some other sources, it would not be possible on the part of the assessee to execute work awarded by MCGM. The Tribunal, therefore, held that the entire purchase made by the assessee could not be added back as income, but only profit element embedded therein, be treated as income of the assessee. 5. We have gone through the well reasoned order of the Tribunal, which has taken into account all relevant facts before passing the order impugned. In our opinion, the order does not warrant any interference. No substantial questions of law arise in the present appeal and the same is, accordingly, dismissed. (emphasis supplied) 6.11 In view of the matter, considering the factual matrix of the case, I am of the opinion that the ratio of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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