9911796707
TMI Blog2014 (3) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... ear, whereas the Revenue's grounds of appeal are as under: "1(i). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance of Rs.43,95,785/- to Rs.13,18,736/- on account of bogus purchases. 1(ii). The CIT(A) erred in restricting the disallowance @ 30% of the total disallowance of Rs.43,95,785/-, without appreciating that in response to letter u/s. 133(6) issued, the suppliers viz. M/s. Arun Industrial Corporation and M/s. Minakshi Enterprises have categorically denied to have sold any goods to the assessee and they also confirmed that only accommodation bills were issued by them to the assessee. The CIT(A) also failed to appreciate the ratio of the decision of the Hon' Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our aforesaid letter sent to me. It is stated that Shri Manoharlal K Dave has shown purchases for the F.Y. 2006-07 from M/s Minakshi Enterprises. I wish to state that I have sent detailed reply to the DDIT(Investigation)-I, Baroda vide letter dated 31.08.2006. Wherein I have clearly slated that no goods are sold by me to Shri Manoharlal K Dave or any other person/company, but I have only given to various parties for the amount paid to me in cheque and the same are returned back to them in cash along with -sales bill and for this work, I use to get some Dalali. Hence, the claim of the Shri Manoharlal K Dave that I have sold goods to them is false, I have not sold any goods to them. I have just issued sales bills to them in the name of M/s M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the department that it is admitted by M/s. Arun Industrial Corporation and M/s. Minakshi Enterprises that they are involved in issuing bogus bills without actual sales on commission basis. It is found that the appellant carries on business of wholesale trading of iron and steel and his sales are supported by delivery challans, transportation details and complete quantitative tally of material purchased and sold. 5.4.1. There is however, adverse evidence on record, showing that the suppliers issued bogus bills. There is statement of the supplying parties that there was a regular arrangement for providing accommodation bills. The burden was on the appellant to prove that the purchases were genuine, However, the appellant has given quantita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee argued that appellant is carrying on business as a trader dealing in different kinds of different steel items in the name and style of M/s. Mayur Steel (India) as proprietary concern since quite a good number of years. The assessee filed return along with audit report and had shown income at Rs.1,55,760/-. The appellant is in steel trade and supplied the steel items directly from supplier to the customer and therefore, earned difference between the independent supplies made by one party to another. The role of appellant in this kind of activity is nothing more than that of indenting agent. It is not the case of the ld. A.O. that appellant inflated its purchases by accounting bogus purchases so as to reduce its taxable profits as a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of Vijay Proteins Ltd. 58 ITD 528, wherein Hon'ble Supreme Court had confirmed the net profit @ 25% but in that case, the assessee was a manufacturer and it has been proved that assessee had inflated the purchase. But in the present case, the assessee is trading of steel items and have low margin of profit. The payments were made through account payee cheque. Ld. A.R. relied in case of CIT vs. Simit P. Sheth [2013] 38 taxmann.com 385 (Gujarat), wherein estimation of profits on bogus purchases in case of trading in steel on wholesale basis and purchases were found bogus but CIT(A) found that these purchases were made from the grey market from other parties. The ld. CIT(A) confirmed the addition on 30%, however, ITAT reduced it to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that if there is an ample evidence to prove that the purchases were not made the entire sum of bogus purchase is liable to be disallowed. 5. We have heard the rival contentions and perused the material on record. The assessee is in trading of steel on wholesale basis. The ld. A.O. verified the purchases and two parties as referred above had denied having been made any sales to the assessee. It is fact that assessee's purchases were found bogus. It is also true that without purchase, no sales can be made. The assessee has shown GP @ 3.86% during the year. In the trading of steel, the margin is less compared to other business. The assessee is not able to prove that he has obtained the bill from these parties but actual purchase the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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