TMI Blog2017 (9) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... ovement of the goods have been found to be dubious. In this case the sales have not been doubted it is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. This proposition is supported from honourable jurisdictional High Court decision in the case of Nikunj Eximp Enterprises [2013 (1) TMI 88 - BOMBAY HIGH COURT]. However the facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expenses of the exchequer. In such circumstances of the case a 12.5% disallowance out of the bogus purchases would meet the end of justice, following the Hon’ble Gujarat High Court’s decision in the case of Simit P. Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. Accordingly, direct that the disallowance in this case should be restricted to 12.5% of the bogus purchases. - Decided partly in favour of assessee. - I.T.A. Nos. 504 And 505/Mum/2017 - - - Dated:- 17-8-2017 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER For The Appellant : Shri Bhupendra Shah For The Respondent : Shri V. Jananrdhanan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Rs.551165/- In reply, M/s. Arun Paper Iron Traders submitted the details called for along with the copies of bills, delivery challan and bank statement evidencing the payment made. The details submitted by the assessee and the purchase party were perused. It was found that assessee and M/s. Arun Paper Iron Traders had filed the copy of bills and delivery challan, but were found to be in different format and in different writing and under different signature. This goes to prove that the bills, delivery challans were non-genuine/bogus. If the bills, delivery challan were original, then the same should have been in the same format, same handwriting and under same signature. One such copy of Bill Delivery challan submitted by assessee is marked as annexure Al and A2 and that filed by M/s. Arun Paper Iron Traders is marked as annexure B1 B2 which forms part of this order. 4.1 The assessee was issued notices u/s 142(1) dated 28.04.2014, 12.06.2014, 02.01.2015 but assessee did not respond to the same. Partial submission was made by the assessee on 25.08.2014 and 4.02.2015 which was filed in tapal. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of probabilities. Further, the assessee failed to file proper details to support his claim despite reminder and therefore, the purchases shown by the assessee from these parties are not verifiable. 4.6 In view of the discussion made above, the entire amount of ₹ 5,51,165/-, being the amount of purchases shown from M/s Arun Paper Iron is added back to the total income vi] s 69C, as the bills/ delivery challan submitted by both the parties differed and that assessee failed to submit and additional evidence to prove the genuineness of the said purchases. This also goes to prove that the bills procured by the assessee in respect of said purchases were forged/ non-genuine and were introduced to inflate the purchases. 7. Against the above order, the assessee preferred an appeal before the ld. CIT(A). On the issue of reopening, the ld. CIT(A) affirmed the correctness of reopening by observing as under: Firstly in the case of the assessee the original return of income had only been processed u/s. 143(1) of the Act and no opinion had been formed by the AO. In the case of ACIT vs. Rajesh Jhaveri Stock Brokers (p.) Ltd 291 ITR 500 (SC) and in the case of DCIT vs. Z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe and not establish fact of escapement of income and therefore, looking to the scope of Section 147 as also Sections 148to 152 of the Act, even if scrutiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the assessing authority can form a belief that the income of the petitioner has escaped assessment, it is a/ways open for the assessing authority to reopen assessment. From the reasons which are recorded, it clearly emerges that the petitioner is the beneficiary of those entries by Kayan brothers, who are well known entry operators across the country and this fact has been unearthed on account of the information received by DGIT Investigation Branch and therefore, it cannot be said in any way that even if four years have been passed, it is not open for the Authority to reopen the assessment. In the present case, there was independent application of mind on behalf of the assessing authority in arriving at the conclusion that income had escaped assessment and therefore, the contentions raised by the petitioner are devoid of merits. Dealing with the contentions of the petitioner that the information receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der has deposed and admitted before the Maharashtra Sales Tax Authority vide statement/ affidavit that they were engaged in providing bogus accommodation entries wherein bogus sale bills were issued without delivery of goods, in consideration for commission. These, accommodation entry providers, on receipt of cheques from parties against bogus bills for sale of material, later on withdrew cash from their bank accounts which was returned to beneficiaries of bogus bills after deduction of their agreed commission. The Assessee was stated to be one of the beneficiaries of these bogus entries of sale of material from hawala entry operators in favour of the assessee wherein the assessee made alleged bogus purchases through these bogus bills issued by hawala entry providers in favour of the assessee. These dealers were surveyed by the Sales Tax Investigation Department whereby the directors of these dealers have admitted in a deposition vide statements/affidavit made before the Sales Tax Department that they were involved in. issuing bogus purchase bills without delivery of any material. There is a list of such parties wherein the assessee is stated to be beneficiary of bogus purchase bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO (1999)236 ITR 34 (Supreme Court). 12. The above discussion and precedent from Apex Court fully justify the validity of reopening in this case. Further I find that the Ld. CIT(A) has carefully examined the issue and has properly appreciated the issue. Hence, I do not find any infirmity in the same. Accordingly, I uphold the order of the Ld. CIT(A) on the issue of reopening. Since, the issue has been decided on the basis of the Hon'ble Apex Court decision, the other ca e laws referred by assessee are not supporting the assessee's case. 13. As regards, merits of the addition upon consideration of the facts of the case, I find that overwhelming evidence have been referred by the authorities below that the impugned purchases are bogus. That documents submitted regarding actual movement of the goods have been found to be dubious. In these circumstances learned departmental representative has referred to Hon ble Gujarat High Court decision in the case of tax appeal no. 240 of 2003 in the case of N. K. Industries vs. Dy. CIT, order dated 20.06.2016, wherein hundred percent of the bogus purchases was held to be added in the hands of the assessee and tribunals restriction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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