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TMI Blog2024 (12) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... ese appeals are filed under Section 260A of the Income Tax Act, 1961 (for short the Act ) by the Appellant proposing the following substantial questions of law arising out from the common order dated 03.11.2023 passed by the Income Tax Appellate Tribunal (for short the Tribunal ), Rajkot in ITA No. 206/Rjt/2022 and ITA No. 207/Rjt./2022 for the Assessment Year 2014-15 and Assessment Year 2015-16. Tax Appeal No. 545 of 2024 (A) Whether on the facts of the case as well as in law, the Income Tax Appellate Tribunal was justified in confirming the order passed by Ld. CIT(A) reducing the disallowance of bogus purchase from Rs. 1,05,43,183/- to Rs. 7,90,739/-? (B) Whether the Appellate Tribunal was justified in inferring the purchase of waste paper from grey market when supporting evidence in this regard was not produced before him? (C) Whether the Appellate Tribunal was justified in confirming the order passed by Ld. CIT(A) reducing the addition made on account of bogus purchase when there was finding by the Gujarat Commercial Tax department that sales of M/s. Chauhan Supplier are bogus and its TIN was cancelled ab-initio ? Tax Appeal No. 270 of 2024 (A) Whether on the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found to be engaged in issuing bogus bills. The Department accordingly cancelled his registration (TIN) number on 12.10.2015 with retrospective effect from 08.01.2014. Since the appellant had carried out purchase transactions with M/s Chouhan Supplier in F.Y. 2013-14, the VAT Department also carried out spot enquiry at the business premise of the appellant on 04.04.2016. During the course of spot enquiry, nothing abnormal was found except the fact that the appellant has made purchase of waste papers from M/s. Chouhan Suppliers in the year under consideration i.e. . . 2014-15 of Rs. 1,05,43,183/-, whose tax registration (TIN) has been cancelled ab initio. This fact is verifiable from the Panchnama and statement of the director recorded by the VAT Department in spot enquiry and the same is submitted by the appellant during the course of appellate proceedings. 8.3 From the above, it is clear that, the VAT Department did not find anything incriminating from the premises of the appellant. In fact, statement of the director recorded by the VAT authorities in presence of Panchas clearly reveals that the officers of VAT Department have verified the financial records, statutory returns and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly following the above stated decision of the Hon'ble Jurisdictional High Court of Gujarat, and particularly looking to the fact that the stock as on the date of verification by Excise Department was tallied, it is concluded that the appellant might have purchased the raw-material from any other sources and not from M/s. Chouhan Supplier. Under such circumstances, entire purchase should not be added to the income of the appellant but only profit element embedded therein it to be added. 8.12 Therefore, considering the appellant's GP of 9.52% and NP of 2.09% and also probable saving in the cost of purchase by avoiding burden of VAT of 5% and some other savings and discrepancies noticed by the AO in the assessment order, It is reasonable to estimate the probable benefit derived by the appellant at 7.5% of the total purchase made from M/s Chouhan Suppliers, which works out to Rs 7,90,739/- Hence, the addition is restricted to the tune of Rs. 7,90,739/- and thus, the AO is directed to delete the balance amount of addition of Rs. 97,52,444/-. Thus, the grounds of appeal No.3 and 4 are partly allowed . 5. Being aggrieved, the appellant-revenue preferred an appeal before the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 taxmann.com.402. (3) CIT Vs. Bholanath Poly Fab (P.) Ltd reported in (2013) 355 ITR 290. 7. Learned Senior Standing Counsel Mr. Karan Sanghani submitted that the Tribunal has committed an error in upholding the order passed by the CIT(Appeals), more particularly, when the respondent-assessee has admitted that the purchases made from M/s. Chauhan Suppliers were bogus purchases and accordingly, the same has been rightly added by the Assessing Officer as income of the assessee under Section 68 of the Act. It was further submitted that on the basis of the information made available from DGCEI, the case of the respondent-assessee was reopened on the ground that to prove the purchases, the respondent-assessee failed to produce the relevant documents to show that the purchases made from M/s. Chauhan Suppliers was genuine purchase and assessee did not produce the purchase invoices, contra ledger/confirmation from the supplier, Inward Register kept at business premises, Transport/Lorry receipt etc. It was therefore, submitted that the assessee has rightly disallowed the entire purchases made by the respondent-assessee being bogus purchases. It was therefore submitted that the CIT (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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