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Shri Jagdish H. Patel Versus The ACIT, Central Circle-1 (1) , Surat and Vica-Versa

2016 (4) TMI 948 - ITAT AHMEDABAD

Bogus purchases - Held that:- After going through the factual matrix and understanding them in the right perspective, in our considered opinion, the assessee has made purchases directly from the producers/agriculturists who are termed as unregistered dealers (URD) which means that the materials have actually been purchased by the assessee but without any supporting document.

The statement of the assessee is also correct because there are no bogus purchases of goods but only supporting .....

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which can be found at page 11 of the assessment order wherein the assessee had categorically 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 .....

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n 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 of by the addition sustained, therefore, there is no need for making separate additions on this count.- Decided in favour of assessee - ITA. Nos: 582 & 610/AHD/2012, ITA. Nos: 583 & 611/AHD/2012 - .....

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rder of ld. CIT(A)-I, Ahmedabad dated 05.01.2012. 2. The learned representatives of both sides agreed that the facts in issues involved in all these appeals are common therefore, all these appeals were heard together and are disposed of by this common order for the sake of convenience. 3. The common issue in all these appeals relates to the alleged bogus purchases made by the assessee though quantum may differ in different assessment years but the fact is that during the course of search and sur .....

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i Dharmendra Pandya, it was noticed that there was a continuous pattern of deposit and immediate withdrawal of cash. 5. Pursuance to the aforementioned search operation, inquiries were made from the beneficiaries of such bogus/accommodation bills and the assessee before us is one of the beneficiaries. 6. The assessee was found to have made purchases from the following parties during the assessment year 2008-09. (i) M/s. Vishal Traders ₹ 2,67,00,202/- (ii) M/s. Patel Vipulkumar Bharatbhai n .....

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ion 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 prevail .....

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without reading the content of the statement. Now, you are saying that I had admitted that "amount of ₹ 61,05,000/- was given to M/s. Vishal Traders and two others by way of bearer cheques have actually received back is not correct. I had made purchase of goods from direct producer and only invoice of these three party were taken to regularize the same. By doing this, I was getting benefit in purchase price ofRs.4 to 5 per 20 kgs. Also your good self are saying that bill of ₹ 2 .....

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our cash credit limit was sanctioned in Dena Gujarat Gramin Bank at Gandhinagar. Normally, I withdraw cash from Kotak Bank and deposit it in Dena Gramin Bank. Due to this, some time huge cash on hand was maintained with me. Also I purchase Raydo and Aranda from direct producer (farmers). As per the prevailing system, we have to make immediate payment against purchase of goods. Hence huge cash on hand is required to keep with us. The source of huge cash on hand is withdrawals made from the bank o .....

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sed 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 purc .....

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firm after considering the sales /purchase figure of that firm. It proves that sales made by above firm is genuine and in turn my purchase is also genuine. In view of the above, I would like to reply to your questions as under. ……………… ……………… Vii) Explanations on why purchases made frm 10 M/s Vishal Traders, Virpur, 2) M/s. Patel Vipulkumar Bharatbhai ni co., 3) Vaimil Pate. & co., and 4) M/s. Kannaiyalal &am .....

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had confirmed in my statement recorded by your good self against reply to question no. 19. Except this purchase, all other purchases were made by me and supplied by Vishal Traders. As this is my new and first business venture, I was unaware of accounting system to be followed and what was adviced by my account, 1 had followed the same system of book keeping prevailing in the rural area. In the rural area, no one is keeping supporting records except purchase or sales bill of respective items. Thi .....

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e Kapasia and Raydo. Without any raw material (like Kapasia and Raydo) purchase, my sale is not possible. * I would like to brought to your good self s notice, some discrepancy in statement given by the proprietor or above firm on 9-7-2008, as under. a) In reply to question no. 4 & 5, he stated that business was handled by his brother in law Mr. Sanjaykumar M. Joshi and he has no idea of any business transaction. b) In reply to question no. 7, 8 & 9, he stated that he does not know any p .....

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dustries 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 .....

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77; 10,31,915/- from the above party and made bearer cheque payment of ₹ 10,30,000/- as per Statement enclosed herewith. During the course of survey, while recording my statement, by mistake I had confirmed bearer cheque payment of ₹ 11,30,000/- without verifying the fact. Now on verification of my records actual payment is ₹ 10,30,000/- and not Rs.ll,30,000/-. No other purchases were made by me from above party. 4. M/ sPatel Kannaiyalal Prahladbhai. No payment was made to the .....

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t of bogus purchases of ₹ 5,66,81,430/-. 10. Proceeding further the A.O found that the assessee has also admitted undisclosed income of ₹ 61,05,000/-, since the said income was not found to be included in the return of income, the A.O also made an addition of ₹ 61,05,000/-. 11. Aggrieved by these two additions, the assessee carried the matter before the ld. CIT(A). 12. Before the ld. CIT(A), it was strongly objected that the A.O has grossly erred in treating the entire purchase .....

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the producers/agriculturists from whom purchase bills are not available. 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 th .....

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te 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 authorities. The ld. D.R. strongly supported the findings of the A.O. 16. We have carefully considered the orders of the authorities below and have given a thoughtful consideration to the rival submissions. The issue before us is to decide whether the .....

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parties who were subjected to search operation). The statement of the searched party is correct because they have not made any sales to the assessee and have correctly admitted of having issued accommodation bills. 18. The statement of the assessee is also correct because there are no bogus purchases of goods but only supporting accommodation bills are bogus. There is no denying that there is a physical movement of goods- purchases as well as sales. In fact, there is not even a whisper of any bo .....

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ces 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. 19. 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. 20. However, at the same time, in our considered opinion and .....

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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 ha .....

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27. During the course of survey operations, it was noticed that the stock as per books was not the same as per physical verification. Stock of Raydo was found to be short by 54,007 kg. whereas stock of Raydo Khod was found to be in excess of 21,500 kg. Assessee was asked to explain the same. Assessee filed a detailed reply which read as under:- "In reply to question no.5 of my statement dated 20-6-2008, regarding stock position in the godown on the date of survey, I had replied that approx .....

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ge bori stock calculated above) is not known to me. If, we calculate the quantity in kgs., Then it comes to 60,350 kgs. If you add, this difference quantity in physical stock qty. i.e. 254150 kg. + 60,350 = 31450 which is the same as per book stock. ……………… ……………… 28. The explanation of the assessee was not accepted by the A.O who was of the opinion that during the course of survey operations. The assessee himself .....

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ation to the orders of the authorities below. It is an undisputed fact that stock of Raydo was found to be short by 54,0007 kg. whereas stock of Raydo Khod was found to be in excess by 21,500 kg. It is also an admitted fact that the only basis for making the addition by the A.O is that the assessee 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 .....

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