TMI Blog2011 (1) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... pn., and Shlv Metal Corporation are in existence at the address given by the assessee from whom the assessee claimed to have purchased the material. 3 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the assessee has deliberately claimed purchase expenses in the name of the two above said parties and thereby reduced its profit to defraud the revenue of its due taxes. 4 The appellant craves leave to add, to amend, or alter the above grounds as may be deemed necessary. ITA No.2575 2576/Ahd/2008[Assessee] 1 The CIT(A) erred in upholding the reopening of assessment under sec. 147 of the I.T. Act. 1961 which is bad in law as well as on fact of the case. 2 The CIT(A) erred in upholding the addition of ₹ 2,39,024/-for the AY 2003-04 ₹ 9,03,667for the AY 2004-05 being 30% of the total purchases made from M/s. Girnar Sales Corporation and M/s. Shiv Metal Corporation. 3 The C.I.T.(Appeals) ought to have deleted the entire addition of ₹ 7,96,746/- in the AY 2003-04 ₹ 30,12,226/- in the AY 2004- 05 instead of upholding a part of the addition to the extent of ₹ 2,39,024/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 27-03-2006, seeking to treat the returns filed already for the aforesaid two assessment years as the returns in pursuance to notice issued u/s 148 of the Act . During the course of assessment proceedings, to a query by the AO, seeking confirmation from M/s. Girnar Sales Corporation and M/s Hindustan Metal Corporation besides documentary evidence in support of physical delivery of goods, mode of transportation of the goods with vehicle number as also name and address of the transporter loading and unloading the goods, details of labour payments in connect ion with said purchases and its subsequent sale apart from product ion of books of accounts, bills/vouchers, bank statements and stock register, the assessee furnished bills/delivery challans claimed to have been issued by the said parties i.e. M/s. Girnar Sales Corporation and M/s Hindustan Metal Corporation besides certain lorry and octroi receipts. However, the assessee did not furnish any other details or documentary evidence in support of physical delivery of goods, mode of transportation, place of loading and unloading and in turn sale of goods etc. Since the assessee failed to establish genuineness of the purchases from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mit Processors, Prem Kumar Rathi etc. cited supra. The appellant has submitted quantitative tally of material which means that there was purchase of material which were sold to various parties. Taking into account all the relevant facts of the case, I find that 30% of the purchase cost will be a reasonable amount which can be added in this case to cover the gain of the appellant. Therefore, out of total addition of ₹ 7,96,746/- made by the AO on account of purchases, ₹ 5,57,722/- is deleted and ₹ 2,39,024/- is confirmed being 30% of total purchases from M/s Girnar Sales Corporation and M/s Shiv Metal Corporation. 5.3 This disposes off all the grounds from Grounds No.2 to 13. In Ground No.12, the appellant has stated that the AO could not have varied the declared profits of the appellant without rejecting books of account. I find that such an argument does not have any merit. For making any specific addition, it does not necessarily mean that section 145(3) has to be compulsorily invoked. In essence the AO has rejected the book results and has made specific addition relating to the non genuine purchases. The action of the AO is as per law. 5. Simi lar findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich may be leviable in respect of manufacture or sale of goods in question. The suppliers or the manufacturers make a substantial saving in the income-tax in respect of income from sale of unaccounted goods produced and sold by them. This may also be one of the factors due to which the seller may be willing to charge lower rates for unaccounted goods as compared to accounted for goods. Keeping all these factors in mind and also keeping in view the decision of the ITAT in the case of Sanjay Oil Cake Industries (supra) we hold that 25% of the purchase price accounted for in the books of accounts through such fictitious invoices in the name of 33 bogus parties should be disallowed out of the amount of purchases shown to have been made from those 33 bogus suppliers. The total purchases shown as made from these 33 parties which have been disallowed by the AO are as under:- (i) Bogus purchases as discussed in para 38 read with para 22 of the assessment order ₹ 7007826 (ii) Bogus purchases as discussed in para 40 of the asstt. order. ₹ 1799768 Rs.88,03,614 We direct the AO to disallow 25% of the aforesaid amount on account of inflation of purchase price. The amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by cheque from explained funds of the business. These findings have not been disputed before us by the Revenue. The ld. CIT(A) further observed that the materials were purchased from the open market incurring cash payment and bills have been taken from the aforesaid two parties. In the process, the assessee violated the provisions of sec. 40A(3) which prohibits cash purchases and there could be accompanying gain as the purchases were made from unregistered parties who do not pay sales tax and other statutory duties . Accordingly, the ld. CIT(A) while referring to a number of decisions of the ITAT relied upon on behalf of the assessee concluded that 30% of the purchase cost will be a reasonable amount in this case to cover the gain of the assessee. Not an iota of evidence has been placed before us either by the Revenue or the assessee in order to enable us to take a different view in the matter. We are of the opinion that the percentage estimated in a number of decisions by the ITAT is neither static nor a mathematical formula can be applied in all cases. Tribunal in various cases, has observed that estimation of possible benefits derived by the assessee is to be taken in the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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