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Shri Simit P Sheth L/R of Shri Pankaj J Sheth C/o Manish G Shah, Versus Income Tax Officer, Ward-2 (2) , Baroda

2012 (2) TMI 598 - ITAT AHMEDABAD

Bogus purchases - Held that:- We have been informed that the malpractice of bogus purchase is mainly to save 10% sales tax etc. It has also been informed that in this industry about 2.5% is the profit margin. - Therefore, we hereby direct that the disallowance is required to be sustained at 12.5% of the purchases from those parties. With these directions, we hereby decide. The grounds of the rival parties which are partly allowed. - ITA No. 3238 and 3293/Ahd/2009 - Dated:- 24-2-2012 - Shri M .....

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and 5 are general in nature and as per the statement of Ld. AR, Mr. S.N.Soparkar not relevant to decide the main issue. In view of his statement these grounds are hereby dismissed being general in nature. 3. The main issue of the appellant is about the confirmation of addition of ₹ 12,71,471/- on account of alleged bogus purchases of the assessee. Likewise, due to the part relief Revenue has also challenged that Ld. CIT(A) has erred in restricting the addition of ₹ 41,04,903/- to &# .....

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the GP of the immediate past year at 3.56%. An intimation was received by the Assessing Officer from DDIT (Inv.)-I, Baroda. According to the said intimation, during the course of verification of banking transactions in the case of Shri Amratbhai Poonambhai Prajapati, Prop of Bhavna Trading Co. & Bhagyodaya Enterprises, Shri Kantilal Mangilal Shaarma, Prop of Miakshi Enterprises and Shri Jayantilal Mangilal Sharma, Prop of Arun Industrial Corporation and as per the admission in their stateme .....

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parties. On the basis of these facts, the Assessing Officer has held that barring invoices and delivery chllans, there was no other document to prove that the purchases have actually been made by the assessee. There was no lorry receipt, transportation details, number of weighment, excise gate pass etc., no document was produced during the assessment proceedings. After examining the bank accounts and other evidences AO has held that alleged purchases from Bhavna Trading Co., Minaxi Enterprise an .....

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umulation sales bills. However, he was of the view that taking into account the business results 30% of the purchases cost would be reasonable amount to be confirmed to cover the profits of the assessee. Resultantly, to the extent to ₹ 12,31,471/- was deleted. This is the reason that both the sides are now in appeal. As far as addition of estimated income of ₹ 5 lakh is concerned same was deleted, however, Revenue is not in appeal. 6. Ld. AR Mr. Soparkar has contested that the assess .....

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are on record and again the answer was a negative. The Ld. AR has informed that almost in identical situation in the case of ACIT v. M/s Kulubi Steel in ITA No1568/Ahd/2008 order dated 16-12- 2010 vide para-8 has held as under:- 8. From the above, it is evident that the assessee did not make any effort to controvert the finding recorded by the DDIT (Investigation) and it made no efforts to produce the seller parties on the other hand it claimed that it is not his responsibility to produce the se .....

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me, it did purchase the goods from some other suppliers, may be without bill. Therefore, 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, ITAT held that such benefit to be 25% and therefore susta .....

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s, 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 ₹ 94,74 .....

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uld be fair and reasonable to estimate the addition at ₹ 50,000/- as against the addition of ₹ 27,39,407/- made by the Assessing Officer. However, the learned Commissioner of Income Tax (Appeals) considering the facts of the assessee s case, has sustained the addition at 12.5%. While doing so, he has also relied upon the decision of the Tribunal in the case of M/s. Vijay Proteins Ltd. 55 TTJ (Ahd) 76. In the case of M/s. Vijay Proteins Ltd., the Tribunal has sustained the addition of .....

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