TMI Blog2010 (12) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, purchase rate as mentioned in the alleged sales bill cannot be accepted. Any person indulging in the practice of purchasing goods from the grey market and obtaining bogus bills of some other parties, would do so for getting some benefit. But what would be the magnitude of the benefit would depend upon facts of each case. In the case of VIJAY PROTEINS LTD. VERSUS ASSISTANT COMMISSIONER [ 1996 (1) TMI 144 - ITAT AHMEDABAD-C] , ITAT held that such benefit to be 25% and therefore sustained the disallowance for bogus purchase at 25%. In the case of INCOME TAX OFFICER. VERSUS SUNSTEEL. [ 2004 (6) TMI 236 - ITAT AHMEDABAD-B] , the ITAT deemed it fit to sustain the disallowance for a lumpsum amount of ₹ 50,000/- - However, in the case of Shri Anubhai Shivlal, the ITAT has considered both the decisions in the case of Vijay Proteins and Sunsteel and thereafter sustained the disallowance at 12.5%. Thus, it would meet ends of justice, if the disallowance is sustained at 12.5% of the purchase from these two parties. The Assessing Officer is directed to work out the disallowance accordingly - the Revenue s appeal is partly allowed. - ITA No. 1568Ahd/2008 - - - Dated:- 16-12- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by Kunal Corporation, Shri Pravin B. Patel was available. He admitted that he used to issue the bills for Kunal Corporation and was charging monthly sum of ₹ 4000/- to ₹ 5000/- for issuing such bills. However, no goods were actually sold by him to the assessee. During the course of assessment proceedings, the assessee was confronted with the outcome of the investigation made by the department and he was asked to produce both the above parties. However, the assessee denied to produce those parties and stated that it is not the liability of the assessee to produce the parties because the assessee has already produced the evidence of material purchased by it and that material was physically received. On the above facts, the Assessing Officer treated the above purchase as bogus and made addition of ₹ 49,71.832/-. 4. On appeal, the learned Commissioner of Income Tax (Appeals) accepted that the bills issued by the sellers were defective bills, however, he, on the basis of quantitative records and the octroi receipt, held the purchase to be genuine and hence deleted the entire addition. The learned DR has stated that when it is proved beyond doubt by the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 50,000/- for bogus purchase. In the case of Shri Anubhai Shivlal Shah Vs. ITO, 1822/Ahd/200 dated 11-11-2005, the ITAT sustained the disallowance at 12.5% of the purchase. He therefore submitted that either order of the learned Commissioner of Income Tax (Appeals) should be sustained or a nominal disallowance out of bogus purchase may be made because in the case of iron and steel, the sales tax payable was only at the rate of 4%. Therefore, the benefit of purchasing the goods without bill cannot be more than 4%. 6. We have carefully considered the arguments of both the sides and perused the material placed before us. The finding of the inquiry in the case of the alleged seller of the goods conducted by the DDIT(Investigation), as noted by the Assessing Officer in the assessment order reads as under: (i) Anant Corporation, 10/B, Nr.Rajasthan Hospital, Shahi Bagh, Ahmedabad. The Inspectors have reported that this is a residential premise wherein Shri Madanlal Lalchand Mehta is staying since last 30 years. On inquiry with Shri Madalal I. Mehta, he has stated that neither he nor any of his family members is/are carrying on or have carried out any business i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has ever occurred at 24, Yashbhoomi Apartments, Opp. Ghaver Complex, Shahibaug, Ahmedabad. The alleged transactions to the tune of ₹ 21,97,448/- between M/s. Kulbi Steels and M/s. Kunal Corporation, are not supported by any factual evidences that have been gathered till date nor by the statements u/s.131 of the I.T.Act dtd. 15.12.2006 of Shri Pravin B. Patel and his letter dtd.13.12.2006 received on 15.12.2006. 7. During the course of assessment proceedings, those findings were confronted to the assessee in which the assessee furnished the following reply: Vide letter dtd. 22-12-2006 assessee filed its submission and the main contention of the assessee can be summarized as below: a. We have made valid purchases from both the Traders who are holding valid Sales tax registration. b. Both the suppliers have supplies us material physically. c. We have received all the supplied goods in all cases within octroi limit area except three suppliers which were received outside octroi area (Pl.refer our previous submission submitted along with invoices supported by I. Octroi Receipts and 2. Tolkanata Chhitthi) d. You have requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jay Proteins, ITAT held that such benefit to be 25% and therefore sustained the disallowance for bogus purchase at 25%. In the case of Sunsteel (supra), the ITAT deemed it fit to sustain the disallowance for a lumpsum amount of ₹ 50,000/-. However, we find that in the case of Shri Anubhai Shivlal (supra) the ITAT has considered both the decisions in the case of Vijay Proteins and Sunsteel (supra) and thereafter sustained the disallowance at 12.5%. Relevant findings of the ITAT in the case of Anubhai Shivalal reads are under: 3. At the time of hearing before us, it is submitted by the learned counsel that the addition sustained is excessive. In support of this contention he referred to the decision of the Tribunal in the case of ITO Vs. Sun Steel 92 TTJ (Ahd) 1126 wherein the Tribunal has sustained the addition of ₹ 50,000/- on account of bogus purchases. However, we find that the facts in the above case were different. In the above case, the assessee has shown purchases of ₹ 27,39,410/-, sale of ₹ 28,17,207/- and GP at ₹ 94,740/-. The Assessing Officer made the addition of ₹ 27,39,407/- for bogus purchases. If the above sum is added to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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