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2016 (6) TMI 1048 - GUJARAT HIGH COURT

2016 (6) TMI 1048 - GUJARAT HIGH COURT - [2016] 388 ITR 377 - Bogus purchases - possible inflation of purchase price - Held that:- Assessing Officer’s action in treating the purchases as bogus and adding the entire cost of purchases in the assessment ought not to have been restored by the Tribunal. The view taken by the Tribunal in the case of Vijay Proteins Ltd. vs. CIT reported in [1996 (1) TMI 144 - ITAT AHMEDABAD-C ] has been approved. In that view of the matter, keeping in mind the fact tha .....

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n favour of the revenue. - TAX APPEAL NO. 1245 of 2006 TO TAX APPEAL NO. 1248 of 2006 - Dated:- 22-6-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR SN DIVATIA, ADVOCATE FOR THE OPPONENT : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order dated 03.03.2006 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench B (hereinafter referred to as ITAT) in ITA Nos. 407/Ahd/2001, 406/Ah .....

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Tax Appeal No. 1246 of 2006 Whether on the facts and in the circumstances of the case, the conclusion reached by the Income Tax Appellate Tribunal that the purchases aggregating to ₹ 11,49,455/- were bogus, is such could be arrived at? Tax Appeal No. 1247 of 2006 Whether on the facts and in the circumstances of the case, the conclusion reached by the Income Tax Appellate Tribunal that the purchases aggregating to ₹ 33,16,366/- were bogus, is such could be arrived at? Tax Appeal No. .....

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ort. During the course of assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases of varied amounts for various assessment years. The assessee furnished material in respect of the said purchases but the Assessing Officer rejected the same and made additions of various amounts as bogus purchases. 4. The assessee preferred appeals before the CIT(A). The CIT(A) partly allowed the appeals. On appeal before the ITAT, by the revenue, by the impugned .....

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purchases were bogus and payments for purchases had come back to the assessee. He submitted that the Tribunal has failed to appreciate the evidence produced by the appellant to prove the genuineness of the impugned purchases instead relied upon irrelevant evidence so as to come to the conclusion that the impugned purchases were bogus. He has relied upon the decisions of this court in the following cases: (I) CIT vs. Simit P. Sheth reported in [2013] 38 taxmann.com 385 (Gujarat); (II) Commission .....

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volved in the present group of appeals is squarely covered by the decision of the Apex Court in the case of Commissioner of Income Tax vs. Simit P. Sheth reported in [2013] 38 taxmann.com 385 (Gujarat) wherein this Court has observed as under: 7. That being the position, not the entire purchase price but only profit element embedded in such purchases can be added to the income of the assessee. So much is clear by decision of this Court. In particular, Court has also taken a similar view in case .....

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ere made at all, counsel for the revenue would be justified in arguing that the entire amount of such bogus purchases should be added back to the income of the assessee. Such were the facts in case of ACIT (OSC) Ward 5(3) Nadiad Vs. Pawanraj B Bokadia (supra). 9. This being the position, the only question that survives is what should be the fair profit rate out of the bogus purchases which should be added back to the income of the assessee. The Commissioner adopted ratio of 30% of such total sal .....

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profit return must necessarily vary with the nature of business and no uniform yardstick can be adopted. 7.1 Similarly in the case of Commissioner of income tax vs. Bholanath Poly Fab (P) Ltd reported in [2013] 40 taxmann.com 494 (Gujarat), this Court observed as under: 6. We are of the opinion that the Tribunal committed no error. Whether the purchases themselves were bogus or whether the parties from whom such purchases were allegedly made were bogus is essentially a question of fact. The Tri .....

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ppeal No. 679 of 2010 in the case of CIT v. Kishor Amrutlal Patel. In the result, tax appeal is dismissed. 7.2 . A similar question came up before this Court in the case of Sanjay Oilcake Industries vs. Commissioner of IncomeTax reported in [2009] 316 ITR 274 (Guj) and this Court while deciding the said issue has held as under: 12 Thus, it is apparent that both the Commissioner (Appeals) and the Tribunal have concurrently accepted the finding of the Assessing Officer that the apparent sellers wh .....

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ounts. In the light of the aforesaid nature of evidence it is not possible to record a different conclusion, different from the one recorded by the Commissioner (Appeals) and the Tribunal concurrently holding that the apparent sellers were not genuine, or were acting as conduit between the assessee-firm and the actual sellers of the raw materials. Both the Commissioner (Appeals) and the Tribunal have, therefore, come to the conclusion that in such circumstances, the likelihood of the purchase pr .....

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