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TMI Blog2024 (11) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, Judicial Member And Shri Madhusudan Sawdia, Accountant Member For the Assessee : Shri Y.V. Bhanu Narayan Rao, C.A. For the Revenue : Shri Jeevan Lal Lavidiya, CIT-DR. ORDER PER BENCH : The appeals filed by the Revenue and the cross appeal filed by the assessee are directed against the order of Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi dt. 22.04.2024 (hereinafter referred to as the ld.CIT(A) ) invoking proceedings under section 143(3) of the Income Tax Act, 1961 (in short, the Act ) relating to A.Y. 2021-22. 2. The cross objection filed by the assessee is barred by limitation by 16 days. The appellant has moved a condonation petition explaining reasons thereof. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the Cross Objection for hearing. 2.1. For the sake of convenience, both the appeals of assessee and Revenue and the Cross Objection filed by the assessee were heard together and are being disposed of by this common order. 2.2 The Revenue has raised the following grounds : 1. Whether on the facts and circumstances of the case, the Id. CIT(A) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered in such unverifiable purchases where sales are not disapproved, is a sound benchmark which needs to be adopted in the present case too. 4.2.7 Therefore in the instant case too, all the facts and circumstances outlined above leads to the conclusion that although the appellant claimed purchases made from these two parties during the year under consideration but at the same time it is difficult to accept that the purchases shown on the invoices/bills issued by these two parties are as per the prevailing market price of those materials or actually been made from the party and might have been purchased in the grey market. The appellant has not placed any evidence on record that the goods were purchased from these two parties at arms length price. The appellant has also not placed on record any comparable bills/invoices for purchases of similar items made from other party to establish that the purchases from these two parties in question were at par with the purchases made from other parties during the period under consideration. The possibility of such purchases from unregistered dealers without invoices cannot be ruled out. In view of the above, the correctness of the purchase pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflect any credit of TCS as well as regular tax payment. In view of these facts, this ground of appeal is dismissed. 4.6. Additional Ground relates to levy of tax u/s 115BBE of Rs,. 17,18,108/-. During the appellate proceedings, the appellant has raised an additional ground relating to levy of tax u/s 115 BBE by AO/Asst. Unit / CPC. However, no evidence is furnished in support of this ground to show that the taxes u/s 115BBE was levied on the result of assessment order u/s 143(3) of the Act against which the present appeal has been filed. After examination of the assessment order, it is seen that the AO didn t record his any finding about levy of tax u/s 115BBE of the Act. Hence, this ground doesn t arise from the assessment order. Thus, this ground of appeal is dismissed. 5. In result, the appeal of the appellant is partly allowed. 5. Feeling aggrieved with the order of ld.CIT(A), Revenue as well as the assessee are now in appeal before us. 6. Before us, ld.DR submitted that the ld.CIT(A) granted part relief to the assessee ignoring the fact that assessee company could not prove that goods were actually supplied by the two parties i.e., Shri Jawahar Lal Shah and Shri Daya Nand Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Asst. Commissioner of Income Tax, 2020 SCC decided on 28-07-2020, the ld.AR submitted that in the said case, the coordinate Bench of the Tribunal held that the order of the ld.CIT(A) to enhance the addition by treating the entire bogus purchases as the income of the Assessee is not justified. The ld.AR further submitted that in the case of ACIT vs. Sanjay Kumar Kochar, ITAT, Raipur, ITA No.99/RPR/2018 dt. 26.07.2022 relating to deletion of addition on account of Bogus Purchases Bogus Sales, in which entire Addition was deleted. He also referred the case laws, mentioned in the order of ld.CIT(A) and prayed to delete the additions made by the Assessing Officer. The ld.AR also submitted that its purchases are bonafide and material from such impugned purchases was received and the same after some process was also sold and such sales were declared in its accounts and I.T.R filed declaring sales including sales relating to bogus purchases have been accepted by the Revenue since the sales are not doubted. The ld.AR also submitted that during all these years, the GST made by the above suppliers was accepted by the GST authorities. Therefore, it is incorrect to brand the genuine purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2024 wherein the Tribunal on identical facts upheld the grounds raised by the Revenue by holding as under : 17. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case made addition of Rs. 16,86,10,466/- being purchases made from 4 parties, the details of which are given in Para No.3 on the ground that notices u/s 133(6) of the Act were issued to Passhupati Steels India and Rudra Impex but there was no compliance made by these parties. Further physical verification of offices of the above parties were also done and it was found that no such entities are operating from the addresses mentioned. Similarly, in the case of the above parties, the GST Registration was cancelled w.e.f. 24.03.2021 in case of Rudra Impex, the GSTIN of Rico Impex was cancelled w.e.f. 7.6.2019, in case of Passhupati Steel India was cancelled w.e.f. 16.04.2019 and GSTIN of Triveni Steel India was cancelled w.e.f. 28.10.2021. Further, the Assessing Officer noted that three of the purchase par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion that twelve and half per cent of the disputed purchases should be retained in the hands of the assessee as business profits. On appeal to the High Court : Held, dismissing the appeal, the Commissioner (Appeals) believed that the purchases were not bogus but were made from the parties other than those mentioned in the books of account. That being the position, not the entire purchase price but only the profit element embedded in such purchases could be added to the income of the assessee. In essence, the Tribunal estimated the possible profit out of purchases made through non-genuine only parties. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick could be adopted . Xxxx Xxx Xxx 22.2 Therefore, under the circumstances, the Hon'ble High Court had reversed the decision of the Tribunal and directed the Assessing Officer to add the entire bogus purchases. However, in the instant case, no such blank signed cheques and vouchers of the 4 alleged concerns were found nor there was any endorsement on the back of the cheque. Similarly, no blank bill books, letter heads and vouchers of these concerns were found and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated sales were accepted, the amount of bogus purchases in its entirety cannot be added to the returned income and only certain percentage of profit embedded in such tainted purchases is to be added as additional income and further, the estimation of profit is over and above the profit already declared by the assessee in the return of income, we feel appropriate to arrive at the profit margin of 10% on the bogus purchases and thus, addition to the extent of Rs. 82,12,786/- (10% of Rs. 8,21,27,860/-) is confirmed and Rs. 7,39,15,074/- (Rs.8,21,27,860/- - Rs. 82,12,786/-) is deleted. Thus, appeal of the Revenue is dismissed. 12.1. In the result, the appeal of Revenue is dismissed. ITA No.615/Hyd/2024 13. Coming to the appeal of the assessee in ITA No.615/Hyd/2024, in view of our decision in ITA No.606/Hyd/2024, the appeal of assessee is also partly allowed. 14. In the result, the appeal of the assessee is partly allowed. C.O.No.9/Hyd/2024 15. Coming to Cross Objection filed by the assessee, in view of our finding in both the appeals of Revenue as well as the assessee, the cross objection filed by the assessee is dismissed as infructuous. 16. In the result, the C.O. filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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