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TMI Blog2025 (4) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... 016) 72 taxmann.com 289 since the Special Leave Petition against the said decision was dismissed by the Hon'ble Supreme Court in case of N. K. Protiens Ltd. Vs. Deputy Commissioner of Income Tax, on 16 January 2017, (2017) 84 taxmann.com 195 (SC) ? (ii) On the facts and circumstances of the case and in law, the ITAT has erred in restricting the disallowance to profit margin on unproven purchases without considering the position of law established by the Hon'ble Apex Court in the case of N. K. Protiens Ltd, that 100 % disallowances on bogus purchases is upheld ? 3. Since the facts of both appeals are similar, they are, by consent, disposed of by common order by treating Income Tax Appeal No.1240 of 2018 for AY 2009-10 as a lead matter. Brief Facts: 4. The Respondent-Assessee is engaged in trading in electronic items, toys, electronics, etc. A return of income was filed declaring total income of Rs.10,60,910/-, and the same was accepted under Section 143 (1) of the Income-tax Act (hereinafter referred to as 'the Act'). 5. Subsequently, the case of the Respondent-Assessee was reopened on the ground that the purchases made by the Respondent-Assessee from certain partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (Appeal) to 3% of the peak of the purchases, which came to Rs. 20,93,100/-. The relevant discussion of the Tribunal can be found in paragraph 7, which reads as follows;- "7. We have heard the rival contentions and perused the relevant material on record. We are convinced with the arguments of Ld. DR that the assessee has failed to discharge the primary onus of proving the purchases and it could not produce evidences to show actual delivery of material and also could not produce confirmatory letters from the alleged bogus suppliers. Even the assessee failed to produce own books of accounts is in quantitative details. However, We also find that the assessee is in possession of purchases invoices and the payments are through banking channels as evident by ledger extracts of the various suppliers and bank statements placed in the paper book. Therefore, even if all the purchases are found to be bogus, we not that sales turnover has not been disputed by the revenue and the payments are through banking channels. The trend of GP/NP rates does not show abnormal variations. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee: 13. Mr. K Gopal learned counsel for the Respondent-Assessee defended the order of the Tribunal and submitted that statements recorded by the Sales Tax Department of the suppliers were not furnished during the assessment proceedings. He relied heavily on the submissions made before the CIT (A). He submitted that the Respondent-Assessee had filed the detailed paper book with the Tribunal and correlated each purchase and sale. He further submitted that there is no material to show that the Respondent-Assessee has received cash. He, therefore, submitted that the disallowance made by the officer was not justified. Mr Gopal further submitted that the provisions of Section 69C of the Act were not invoked by any of the authorities. He relied upon the following case laws in support of his submissions: i. Pr. CIT Vs Mohommad Haji Adam & Co. (2019) 103 taxmann.com 459 (Bombay). ii. Pr. CIT Vs Vaman International Pvt. Ltd. ITXA/1940/2017. iii. Pr. CIT Vs JK Surface Coatings Pvt. Ltd. ITXA/1580/2017. iv. PCIT Vs Shampoorji pallonji & Co. Ltd. (2022) 288 Taxmann 661 (SC) v. PCIT Vs Shampoorji pallonji & Co. Ltd. (2020) 423 ITR 220 (Bombay). vi. PCIT Vs Tejua Rohitkumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w abnormal variations. Therefore, the conclusion of estimating any profit at 3% on the alleged purchases would not arise. 19. The justification given by the Tribunal for 3% as purchase from the grey market, which as admitted by the respondent assessee was never the case put forward by them at any stage, is perverse and erroneous. Regarding the reference to the purchases from the "grey market", at the outset, we may note that even Mr Gopal, the learned Counsel for the Respondent Assessee, admitted that such was never the case of the Respondent Assessee before any of the authorities. Even the records show that the Assessee never urged such a case before any authorities at any stage. Therefore, the AO and the CIT(Appeals) naturally did not advert to this aspect. No one had even argued this case before the ITAT. Still, the ITAT, in its final order, speculates that this must have been the case and builds this defence for the Assessee. This approach suffers from perversity. 20. The issue before the Tribunal was whether the purchases from the concerned suppliers were bogus and, if the answer was yes, whether the whole of the purchases should have been added. The Tribunal has concluded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why the documents from these suppliers could not be produced if they were related. Furthermore, before the Tribunal, no such plea of denial of cross examination has been taken by the Respondent-Assessee as evident from paragraph 6 of the impugned order which records the submissions of the Respondent-Assessee. Therefore, for all these reasons, the plea raised now, which was not taken before the AO and the Tribunal cannot be entertained, and in any case, there are other independent findings based on which the Assessing Officer and the Tribunal has come to a conclusion that the transactions were bogus. 25. The submissions of the learned counsel for the Respondent-Assessee that provisions of Section 69C of the Act were not invoked by any of the authorities and therefore no addition could be made is to be rejected. In our view, firstly, the provisions of Section 69C of the Act are enabling provisions and therefore, even in the absence of invocation of such provision, the addition could have been made. In any case, the ingredients of the provisions of Section 69C which deals with unexplained expenditure and non-allowability of unexplained such spending was in essence the subject matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were purchased. We fail to understand how this is possible. (viii)Further three more parties were found to have supplied the goods to the Respondent-Assessee during the course of the assessment proceedings whose genuineness were questioned and these were related parties but same were not proved. (ix) The Respondent-Assessee failed to produce the ledger copy of the suppliers on the ground that data is not available and the same has been lost. The FIR was lodged on this issue was on 17 December 2012 i.e. prior to the submission filed with the Assessing Officer (x) The officer has stated that statements of the suppliers admitting that these transactions are bogus were only supplementary evidence and not the sole evidence for making the addition. (xi) In the assessment order, it is also recorded that no stock register or delivery challans are maintained. 28. The CIT (A) has only reproduced the submissions made by the Respondent-Assessee and the reasoning given by the Assessing Officer and thereafter, merely in a casual way, has observed that since the Respondent-Assessee has filed copies of bills and bank statements, the purchases are to be treated as genuine. After hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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