TMI Blog1993 (3) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... , in fact, been carried out. The petitioner was one of the parties to whom such bogus bills had been provided by Parshuram Metal Industries. Action under section 133A was therefore taken in the petitioner's case in February 1985 and it was found that the petitioner had debited in its books purchases from Parshuram Metal Industries as under:- Assessment year Amount (Rs.) 1982-83 27,030 1983-84 51,950 1984-85 1,85,510 The department, therefore, reopened the assessment proceedings for assessment year 1982-83 by issue of notice under section 148 and took further action under section 143(2)(b) for assessment years 1983-84 and 1984-85. 4. While these proceedings were pending, the petitioner submitted returns under the Amnesty Scheme for these three years in March 1986. In these returns, it offered for taxation 'peak' of the amounts of purchase debited in the books as per purchases made from Parshuram Metal Industries. The amnesty returns were, however, not accepted under the Amnesty Scheme and reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the petitioner obtained bogus bills from PMI and made cheque payments to PMI debiting those cheque payments as the purchase prices of the bills. It is explained that after making such cheque payments to PMI the petitioner used to get the same amount of the cash back from PMI because in reality there was no purchase from PMI. It is urged that such cash was used again for making cash purchases from other dealers as explained above. It is the contention that in these circumstances the matter should be treated on the same lines as unproved loans and only the peak of such bogus bills should be disallowed. 6.2 The petitioner has urged that whereas the purchases debited as purchases from PMI are bogus, there are other purchases in cash which are not debited and, therefore, even if the debits in respect of purchases from PMI are not treated as genuine, the fact remains that there are some purchases which are cash purchases and are not debited in the books and, therefore, a deduction has to be allowed for those purchases. It is argued that in these circumstances, in fact, only some nominal disallowance can be made out of the Purchase Account on the assumption that there may be some in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For these reasons, it cannot be said that the applicant has been able to establish the quantitative tally of the opening stock and purchases with the sales and closing stock for the relevant assessment years. 7.3 In these circumstances, when there is no quantity tally, the debits in respect of the purchases from PMI have to be taken as mere bogus debits which only inflate the total of the purchases account. There is no material to come to the conclusion that as against such bogus bills debited there must have been some other cash purchases which would call for a different consideration of facts. In fact, we find that initially it was not the petitioner's case that all purchases were genuine though the bills supplied were bogus bills. As discussed above, in that situation, only the inflation in purchase price would come in for disallowance, as pointed out in the Tribunal decision mentioned above. On the other hand, when filing the amnesty returns, the petitioner offered to be taxed on the peak amounts of purchases from PMI which we find are only slightly less than the total purchases shown as purchases from PMI as under :- Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount (Rs.) 1982-83 55,000 1983-84 1,05,000 1984-85 1,20,000 Thus, in short, the petitioner suggests that only half the amount should be disallowed. 9. We have heard the counsel for the petitioner and the Commissioner (DR) on the above points. We find that the petitioner concedes that part of the purchases are not allowable as deduction for want of proof and another part not allowable as payment was made in cash in amounts exceeding ₹ 2,500. We further find that the DDI, Settlement Commission has reported that there is no quantity tally of opening stock and purchases with sales and closing stock as observed above. We feel that in these circumstances the best course to follow would be to reject the book result and to estimate the business income under section 145(2) of the Act. 10. The relevant facts can be summed up in brief as under:- Asst. Year Turnover Total purchases from PMI debited in books Total disallowance u/s 40A(3) by ITO Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest under section 139(8). Interest under section 215/217 will be charged on the basis of the total income computed by us for the period from 1-4-1984 to 15-6-1985. 13. Penalties leviable, if any, under sections 271(1)(a), 271(1)(b), 271(1)(c ) and 273 of the Act are waived. The petitioner is also granted immunity under section 245H of the Act from prosecution under any provisions of the Act with regard to the case covered by this settlement. 14. This order shall be declared void if it is subsequently found by the Settlement Commission that the same has been obtained by fraud or misrepresentation of facts. ANNEXURE-1 Name of the applicant : M/s Rainbow Metals(India) Status : Registered Firm Assessment year : 1982-83 Previous year ending : S.Y. 2037 COMPUTATION OF TOTAL INCOME Business Income Net Profit as per Profit Loss Account ₹ 22,440 Add: Income-tax ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of the applicant : M/s Rainbow Metals (India) Status : Registered Firm Assessment year : 1983-84 Previous year ending : S.Y. 2038 COMPUTATION OF TOTAL INCOME Business Income Net Profit as per Profit Loss Account ₹ 27,611 Add : Interest paid to partners ₹ 31,059 Income-tax ₹ 3,575 TDS ₹ 702 Donation ₹ 171 ₹ 35,507 Less: Income-tax refund as per P L Account ₹ 477 ₹ 35,030 ₹ 62,64 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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