TMI Blog2017 (9) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... ICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri Subhash S. Shetty For The Revenue : Shri V. Jenardhanan ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 976/Mum/2017, is directed against the appellate order dated 30.11.2016 passed by the learned Commissioner of Income Tax (Appeals)- 24, Mumbai (hereinafter called the CIT(A) ), for assessment year 2010-11, appellate proceedings before learned CIT(A) has arisen before learned CIT(A) from the assessment order dated 9th January, 2016 passed by the learned Assessing Officer(hereinafter called the AO ) u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter called the Act ). 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the Tribunal ) read as under:- I. The Learned CIT (A) has erred in passing the order dated 09/01/2016, disposing of assessee's objections against notice u/s 148 of the I.T Act, 1961 without any basis or justification. 2. The Learned CIT (A) has erred in upholding the AO's action of rejecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Revenue . Subsequently information was received by AO that the assessee has inflated purchases through hawala parties. The assessment was reopened u/s 147 by issuance of notice dated 20-03-2015 u/s 148, which was within four years from the end of assessment year. The assessee filed letter dated 24-03-2015 requesting the AO to accept original return of income filed u/s 139(1) to be return of income in pursuance to notice u/s 148. The assessee asked for reasons for reopening of the assessment u/s 147 which were provided by the AO to the assessee. Notices u/s 142(1) and 143(2) were issued and the assessee submitted another return of income on 18-11-2015 declaring the same income. The genesis of reopening is the letter dated 04-02-2014 received by the AO from DGIT (Inv.), Mumbai that the assessee had entered into hawala transactions for purchases, amounting to ₹ 61,02,974/- from the following parties:- Sr No. NAME OF THE SUPPLIER TIN AMOUNT 1 Rajeshwari Metal Industries 27140353242V 20,83,200 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and genuine picture of the financial status of the assessee . It was observed by the AO that books of accounts do not exhibit correct or complete financial status of the assessee, which were rejected by the AO u/s 145 of the Act and it was concluded by the AO that these purchases were made to reduce profits and consequently taxes. The assessee was asked to show cause as to why addition of 24.71% of bogus purchase amount should not be added to the income of the assessee but the assessee could not furnish any satisfactory reply. Thus, the A.O. came to the conclusion that the amount of ₹ 61,02,974/- was accounted in the books of accounts of the assessee as fictitious invoices in the name of above bogus parties and accordingly the AO disallowed an amount of ₹ 15,08,045/- being 24.71% of ₹ 61,02,974/- and added the same to the income of the assessee, vide assessment order dated 09-01-2016 passed by the AO u/s 143(3) r.w.s. 147 of the 1961 Act. 4. Aggrieved by the assessment order dated 09-01-2016 passed by the A.O. u/s 143(3) r.w.s. 147, the assessee carried the matter in appeal before the ld. CIT(A) who confirmed the additions made by the AO in the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly substantiate and establish that these were genuine purchases made from these parties, hence the learned CIT(A) confirmed the additions as were made in the assessment order passed by the AO, vide appellate orders dated 30-11-2016. 5. Aggrieved by the appellate order dated 30-11-2016 passed by the ld. CIT(A), the assessee is in appeal before the tribunal. 6. The ld. counsel for the assessee submitted that the assessee is not challenging the reopening of the assessment by Revenue and the ground no 1 challenging the legality and validity of reopening u/s 147/148 is not pressed and the same may be dismissed. However, it was pleaded that excessive additions to the tune of 24.71% of alleged bogus purchases have been made by the authorities below and submitted that a fair estimation of profits embedded in the said alleged bogus purchases should be made. It is submitted that the assessee is engaged in the business of erection, commissioning and fabrication and mainly supplying material to Government Agencies, BARC and Tata Power and the material was consumed for manufacturing of goods produced by the assessee. 7. The ld. D.R., on the other hand, relied upon the appellate order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below along with copies of invoices, PAN, delivery notes, details of lorry receipts, bank statements etc. were also produced by the assessee before the authorities below. It was demonstrated that the payments for the said alleged bogus purchases were made through account payee cheques. The assessee also demonstrated that there has been an increase of GP and NP ratio during the subject assessment vis- -vis preceding year. The authorities below have concluded that there was a suppression of profit to the tune of 24.71% of the alleged bogus purchases with the contention and keeping in view current GP ratio of the assessee, that the assessee had alleged to have bought material from else where and invoices at an inflated price has been obtained from these alleged bogus dealers. The assessee on its part has also expressed its inability to produce the said parties . The purchases are appearing in the books of the assessee which are claimed as an expenditure, the primary onus which stood on the assessee s shoulder, thus, did not stood discharged as no effective enquiry by Revenue could take place in the absence of availability of these parties. Further, these parties have als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le cases and was of the view that the case of the assessee is more or less having similar facts as that of M/s. Gem Plaza where the Gross Profit has been taken as 35.48 per cent. The Assessing Officer estimated the Gross Profit of the assessee as 40 per cent. 6. The Assessing Officer further held that the assessee has shown bogus purchases in order to reduce the Gross Profits. 7. In appeal, the Commissioner of Income-tax (Appeals) upheld most of the findings of the Assessing Officer, but reduced the Gross Profit from 40 per cent to 35 per cent. 8. In further appeal, the Tribunal had given further relief to the assessee and reduced the Gross Profit rate to 30 per cent. 9. The counsel for the assessee has submitted before us that the income- tax authorities wrongly held that appellant has shown bogus purchases, and the books of account were wrongly rejected. 10. In our opinion, whether there were bogus purchases or not, is a finding of fact, and we cannot interfere with the same in this appeal. As regards the rejection of the books of account, cogent reasons have been given by the income-tax authorities for doing so, and we see no reason to take a differ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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