TMI Blog2016 (4) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... ategorically stated that he has made purchase of goods from direct producer and only invoices of these three party were taken to regularize the same and by doing so, the assessee was getting the benefit in purchase price of ₹ 4 to 5 per 20 kgs. It was further made very clear that it is not a case where materials were not actually purchased. Thus, it can be seen that even the admission of the assessee related to the procurement of alleged bogus bills at no stage, the assessee admitted that there were no purchases.However, at the same time, in our considered opinion and in our understanding of the facts the possibility of inflated purchases cannot be ruled out. As the assessee himself as admitted in his submission that he is getting the benefit of ₹ 4 to 5 per 20 kgs., an addition of 8% should meet the ends of justice. - Decided partly in favour of assessee Addition in respect of alleged admitted undisclosed income - Held that:- Since we have directed to restrict the addition on account of bogus purchase to 8% of the total purchases, in our considered opinion any admission/disclosure made by the assessee on account of alleged bogus purchases would be taken care o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Patel Vaimilkumar Harshadbhai ₹ 10,31,915/- (iv) Kanaiyalal Prahladbhai Patel ₹ 2,96,052/- (v) URD Purchases ₹ 56,85,481/- Total ₹ 5,66,81,430/- 7. The assessee was asked to furnish explanation in this regard. The assessee was also given copies of statements of Shri Madanlal Shah and Shri Dharmendra Pandya vide submission dated 12.11. 2010, the assessee submitted his explanation in regard to the issue of bogus/purchases. The relevant portion of the said submission of the assessee reads as under:- '6. a. I have commenced my business w.e.f. October, 2006. This being my first business venture, I was unaware of accounting system to be followed. So, what was advised by my consultant, I had followed the same system of book keeping. Your observation of not keeping any record like stock register, movement register, delivery challans, L.R., bills and receipts for purchases made is correct as the same system of book keeping is prevailing in the rural area. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the above, it seems that your good self has drawn conclusion that no actual material was purchased by me and only purchase bills were taken from above party and my total purchase is bogus. Then how I have effected sale of goods to outsiders? If, for a while, presume that your hypothesis is correct then correspondingly my total sales is also bogus. This is not correct. The fact is I had purchased goods, processed it in the factory with power consumption and sold finished goods to others. Payment is received from buyer of goods and deposited in the bank. I did not accept that any bogus purchase was made by me during the financial year 2007-08 2008-09 and any undisclosed income of ₹ 61.05 lacs is earned by me during the above years. f. With regard to statement given by Shri Bharatbhai Vihabhai Patel on 30.6.2008, I am enclosing a copy of affidavit executed by proprietor of above firm for your goodself s kind consideration. I also enclose herewith copy of sales tax assessment order for F.Y. 2008-09 passed by Sales Tax Officer, Mehsana imposing huge tax liability on above firm after considering the sales /purchase figure of that firm. It proves that sales made by abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y dealing with the party. He has not invested any capital in the business and whether any books of accounts are maintained or not he does not know ? c) In reply to question no. 13 and 14, he confirm that he has not delivered any goods and issued only invoice. Both his reply mentioned above are contradictory itself and not require to believe as true. * In his second statement given on 22-9-2008, in reply to question no. 5, he has never mentioned name of Tirupati Agro Industries to whom fake invoices were given by him. * Even in statement given by Mr. Madanlal Chandak on 22-9-2008, in reply to question no. 12, he has also not given the name of our firm to whom fake bills were given by M/s. Vishal Traders. *In the Circumstances mentioned above, I have reason to believe that both the parties had given statement under pressure to save himself from all legal consequences, hence their statement is liable to be rejected. 2. Patel Vipulkumar Bharatbhai ni Co.: * I had purchased goods from above party and payment is made by account payee cheque. No bogus purchase is made by me from above party. In my earlier reply, I had already submitted affidavit of above part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable. To regularize such purchases, the assessee procures accommodation bills and such accommodation bills may be bogus but the purchases are not at all bogus. After considering the facts and the submissions and after discussing and drawing support from the decision of the Tribunal in the case of N.K. Proteins Pvt. Ltd. 4 SOT 479, Vijay Proteins Ltd. 58 ITD 428 and also from the decision of the Hon ble High Court of Gujarat in the case of Sanjay Oil Cake Industries 316 ITR 274, the ld. CIT(A) directed the A.O to disallow 25% of bogus purchases of ₹ 5,66,81,430/- thereby confirming the disallowance at ₹ 1,41,70,358/- and deleting the disallowance of ₹ 4,25,11,072/-. 14. In so far as, the addition of ₹ 61,05,000 is concerned, the ld. ld. CIT(A) was convinced that the aforementioned disclosure since related to alleged bogus purchases is included in the addition sustained by him, therefore, no separate addition is required and accordingly deleted the addition of ₹ 61,05,000/-. 15. Aggrieved by this, both the assessee and the revenue are in appeal before us. The ld. counsel for the assessee reiterated what has been stated before the lower authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission that he is getting the benefit of ₹ 4 to 5 per 20 kgs., an addition of 8% should meet the ends of justice. 22. Modifying the findings of the ld. CIT(A), we direct the A.O to restrict the disallowance in respect of bogus purchases to 8% of ₹ 5,66,81,430/-. Thus the disallowance should be restricted to ₹ 45,34,515/-. Assessee gets a partial relief. 23. In so far as the addition of ₹ 61,05,000/- is concerned, in our considered opinion, the partial disallowance of purchases would take care of any admission made by the assessee, therefore, requires no separate disallowances/additions and the same is directed to be deleted. ITA Nos. 583 611/Ahd/2012 for A.Y. 2009-2010 24. Ground no. 1 2 relates to the alleged addition in respect of bogus purchases amounting to ₹ 3,03,29,066/-. 25. An identical issue has been decided by us in ITA Nos. 582 610/Ahd/2012 hereinabove qua ground no. 1 of that appeal. For our detailed discussion and reasoning therein and for similar reasons, we modify the findings of the ld. CIT(A) and direct the A.O to restrict the disallowance on account of alleged bogus purchases to 8% amounting to ₹ 24,26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee admitted in his statement during the course of the survey operations. 30. However, in our considered opinion the explanation/reconciliation made by the assessee cannot be brushed aside lightly the A.O ought to have examined the reconciliation statement. We find that even the First Appellate Authority has not given any consideration to the reconciliation statement filed by the A.O. Therefore, in the interest of justice and fair play, we restore this issue to the files of the A.O, the A.O is directed to consider the reconciliation statement of the assessee and decide the issue afresh after giving a reasonable opportunity of being heard to the assessee. Ground no. 3 is allowed for statistical purpose. 31. Ground no. 4 relates to the addition of ₹ 5,63,929/- in respect of alleged admitted undisclosed income. 32. A perusal of the assessment order shows that this addition has been made by the A.O solely on the basis of the admission made by the assessee during the course of the survey proceedings. Since we have directed to restrict the addition on account of bogus purchase to 8% of the total purchases, in our considered opinion any admission/disclosure made by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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