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2016 (7) TMI 909 - ITAT MUMBAIReopening of assessment - Additions made on account of bogus purchases - Held that:- AO had specific information that the assessee had obtained accommodation bills from Hawala dealers to the extent of ₹ 10,69,87,060/- for three AYs i.e. AY 2009-10, 2010-11 and 2011-12. A survey was carried out at the premises of the assessee. The AO on the basis of the statement of the Director of the assessee company wherein he had declared additional income for the year under consideration reopened the assessment. Thus, the AO was having sufficient reason to believe that there was escapement of income. Accordingly we do not find any infirmity in the order of AO for reopening the assessment. Coming to the disallowance of alleged bogus purchases,we found that these suppliers were found to be non-genuine by the sales tax department, even though it was the contention of ld. AR that suppliers were registered with VAT where stringent process is followed for issuing VAT registration like photo, verification of address (residential and office), ration card and proof of residence. However, at the very same time, we cannot ignore the actual purchases made by the assessee, which was utilised for its construction purpose and sales.AO recorded a finding to the effect that the rate of items supplied by hawala dealers was higher as well as lower also but the ultimate effect of the purchases from all such hawalas dealers has resulted in the higher profit margin shown by the assessee. It means there is no adverse effect of the purchase so made even from the hawala dealers, insofar as purchase so made have actually been consumed and similar profit has been shown by the assessee in respect of these purchases when utilized in construction and/or sold. As carefully gone through the particulars of the alleged bogus bills, nature of goods supplied, products supplied and payments details. We had also verified the confirmation of accounts for purchase of goods, bank statement showing payments made for alleged purchase bills. The purchase so made were consumed by the assessee in the business of its civil and interior work which includes external and internal glazing of glass work and providing & fixing aluminum windows. We had also verified the comparative GP and NP rate shown by the assessee which appears to be reasonable as compared to the other business house engaged in the similar line of civil and interior work. The net profit rate shown by the assessee ranged between 3.04% to 3.61%. From the record we found that assessee had shown GP rate of 16.39% and 23.49% in the assessment year 2009-10 and 2010-11, which is much better than the gross profit rate shown in the assessment year 2008-09 at 11.41%. Moreover the GP rate shown by the assessee is comparable to the GP rate shown by other assessee engaged in similar trade. However, to safeguard the interest of revenue and to cover the leakage of revenue, if anyone, and also totality of facts and circumstances of the case before us, we direct the AO to restrict the addition to the extent of 2% of alleged bogus purchases so made. - Decided partly in favour of assessee
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