Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M/s B.J. Exports Versus ACIT-30 (1) , Mumbai

Bogus purchases from alleged hawala operators - information received from DGIT (Inv) further supported by the list prepared by Maharashtra Sales-tax department - estimation of net profit on bogus purchases - Held that:- In the absence of any finding as to the incorrectness in books of account and stock registers, purchases cannot be doubted. Under these facts and circumstances it can be concluded that the assessee has obtained bills to reduce profits. Hence, what needs to be taxed in this case i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the assessee. The ITAT, Mumbai Benches in several cases has upheld estimation of net profit at 12.5% on such purchases. Therefore, considering the overall facts & circumstances of the case and also relying upon the ratio of case laws discussed above, we are of the view that in the case of bogus purchases, only profit element embedded in such purchases needs to be taxed but not total purchases. Accordingly, we direct the AO to estimate net profit at 12.5% on total alleged bogus purchases. - Dec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e sake of convenience, these appeals were heard together and are disposed of by this common order. 2. In these appeals, the assessee has more or less raised common grounds. However, the only solitary issue arising from those grounds of appeal relate to additions made by the AO towards bogus purchases from alleged hawala operators and findings of the CIT(A) in reducing the disallowance made by the AO to net profit element in those alleged bogus purchases. 3. The brief facts of the case as extract .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wherein they have confessed to have floated dummi concerns in the name of friends and relatives of giving accommodation entries of purchases. Accordingly notice u/s 148 of the Income-tax Act, 1961 was issued. In response to notice u/s 148, the assessee filed return of income declaring total income at ₹ 12,78,131. Thereafter, the case was selected for scrutiny and accordingly notices u/s 143(2) and 142(1) of the Act were issued. In response to notices, the authorized representative of the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g it to substantiate the purchases claimed to have been made from the alleged hawala operators with necessary evidence. In response, the assessee filed purchase invoices, export invoices, shipping bills, airways bills, export bill realization certificates, bank statement showing payment for purchases and stock registers to prove the purchases made from the alleged parties are genuine. The AO, after considering relevant submissions of the assessee and also taking into account the information rece .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee reiterated its stand taken before the AO. The assessee further submitted that merely because a third party has alleged that certain parties are involved in providing accommodation entries and also they are listed as suspicious hawala operators, addition cannot be made ignoring all evidences filed in the form of purchase invoice, export invoices, shipping bills, airways bills, export bill realization certificates, bank statement showing payment for purchases and stock details to prove tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he AO has not pointed out any discrepancy in the books of account and stock registers. In the absence of any finding as to the incorrectness of books of account and stock register, purchases from the above parties cannot be doubted, more so, when all the details have been furnished to justify the purchases. 6. The CIT(A), after considering the explanations of the assessee and also relying upon the decision of Hon ble Gujarat High Court in the case of Vijay Proteins Ltd vs CIT (2015) 58 Taxman.co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

postal authorities unserved also indicates that the parties are not existed at the given addresses. All these facts go to prove that purchases from the above parties are not genuine and hence, the AO was right in treating purchases from said party as bogus in nature. The CIT(A) further observed that the AO has not disputed sales declared by the assessee. The purchases / sales co-relation has not been controverted by the AO. No discrepancy in stock has been pointed out. The fact that payments ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of 30% on the alleged bogus purchases. Aggrieved by the order of CIT(A), the assessee is in appeal before us. 7. The Ld.AR for the assessee submitted that the Ld.CIT(A) erred in disallowing 30% of the purchases made from M/s Little Diam ignoring the fact that the purchases were made wholly and exclusively for the purposes of business and the purchases are exported in the normal course of business of the assessee. The Ld.AR further submitted that merely because third parties had made unsubstanti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that purchases from above parties are bogus in nature which is evident from the fact that the parties have accepted before DGIT (Inv) that they are involved in providing accommodation entries. The Ld.DR referring to the decision of Hon ble Supreme Court in the case of N.K. Proteins Ltd in SLP 759 of 2017 dated 16-01-2017 submitted that once it is proved that the purchases are bogus, then addition should be made for entire purchases and not for profit element embedded in such purchases. In this c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e parties as suspicious hawala operators involved in providing accommodation entries. The AO further observed that during the course of search in Bhanwarlal Jain group, Shri Bhanwarlal Jain and his son Shri Rajesh Bhanwarlal Jain admitted that they have floated dummy concerns in the name of friends and relatives, which were engaged in giving accommodation entries. The AO, based on the information received from DGIT (Inv) coupled with further independent enquiries conducted during the course of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tention of the assessee is that merely because parties have not responded to the notice, addition cannot be made towards purchases, which are supported by proper evidences. The assessee also contended that the AO has not pointed out any irregularity in the books of account or stock statement and in the absence of any finding as to the incorrectness of books of account, addition cannot be made solely on the basis of third party statement. 10. The AO made additions based on the information receive .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct remains that the notices issued u/s 133(6) to the addresses given by the assessee were returned unserved with remark no such parties are available at the given address. Therefore, we are of the considered view that mere production of purchase bill and payment proof would not absolve the assessee of his initial onus to prove the purchases, more particularly, when other facts clearly show a finger on the assessee that the above parties are involved in accommodation entries and the assessee is o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee. In the absence of any finding as to the incorrectness in books of account and stock registers, purchases cannot be doubted. Under these facts and circumstances it can be concluded that the assessee has obtained bills to reduce profits. Hence, what needs to be taxed in this case is only the profit element embedded in such purchases, but not the entire purchases from the above parties. 11. Having said so, let us examine what is reasonable profit in case of these transactions. Various courts an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Highlight: The interest u/s 234B of the Act cannot go beyond the stage of S.245D(I) before the Settlement Commission - HC

Highlight: Galvanized iron pipe is a different commercial commodity than a iron pipe, therefore the activity of galvanization in our considered opinion amounts to manufacture - Deduction u/s 80-IB allowed - HC

Highlight: Penalty u/s 271C - non deduction of TDS on interest paid to sister concerns in terms of Section 194A - Levy of penalty confirmed - HC

Highlight: Disallowance of interest - reference to section 179 - The legislature has also recognised, that the doctrine of lifting of veil in the matter of tax dues is to be applied to prevent fraud etc. and not where the company has suffered despite its normal bona fide function. - HC

News: RBI Reference Rate for US $

Notification: Amendment in Notification No. S.O. 3118(E), dated the 3rd October, 2016

Highlight: Discount on ESOP to be allowed as business expenditure u/s 37(1), during the years of vesting on the basis of percentage of vesting during such period, subject to upward or downward adjustment at the time of exercise of option.

Notification: Central Government appoints the 20th September, 2017 as the date on which proviso to clause (87) of section 2 of the Companies Act 2013, shall come into force

Notification: Companies (Restriction on number of layers) Rules, 2017

Highlight: Penalty u/s 271(1)(c) - additional income disclosure - surrender of income post survey u/s 133A - he disclosure made by the assessee is voluntary in nature, in the revised return - no penalty

Highlight: Reopening of assessment - notice u/s 148 issued on the directions of JCIT / CIT - a perusal of reasons for initiating reassessment proceedings clearly show that they are against the sprit of provisions u/s 147

Notification: All Industry Rates of Duty Drawback Schedule

Highlight: MAT - Adjustment to book profit - computation u/clause (f) of Explanation-1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A r.w.Rule 8D of I.T. Rules.

Notification: The Customs and Central Excise Duties Drawback Rules, 2017

Highlight: Addition on account of alleged suppression of service value received - the addition made simply believing the Form 26AS will be an arbitrary exercise of power which cannot be sustained

Notification: Exempts intra state supply of heavy water and nuclear fuels from DAE to NPCIL

Notification: Seeks to amend notification No. 12/2017-UTT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017

Notification: Seeks to amend notification No. 11/2017- UTT(R) to reduce CGST rate on specified supplies of Works Contract Services

Highlight: Liability to pay duty on import of software - Though no authorization was given by the appellant to DHL, it is an undisputed position that the software has, in fact, been ordered by the appellant and have been delivered to them by DHL - the appellant is to be considered as the importer

Notification: Exempts inter-state supply of heavy water and nuclear fuels from DAE to NPCIL

Notification: Seeks to amend notification No. 09/2017-IT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017

Notification: Seeks to amend notification No. 08/2017-IT(R) to reduce CGST rate on specified supplies of Works Contract Services

Notification: Exempts intra state supply of heavy water and nuclear fuels from DAE to NPCIL

Notification: Seeks to amend notification No. 12/2017-CT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017

Notification: Seeks to amend notification No. 11/2017-CT(R) to reduce CGST rate on specified supplies of Works Contract Services.

News: Tax on fuel more important for a dry state like Gujarat

Highlight: For an ayurvedic medicine to be classified under Chapter 30 has to pass the test whether it is for cure of any disease. If the same is only meant for care, then such product would not fall under medicament.

Highlight: Demand of interest - the period of limitation that applies to a claim for the principal amount should also apply to the claim of interest thereon.

Highlight: Government issues new notifications under CGST, IGST and UTGST to grant fresh exemptions in respect of certain supplies.

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Central Goods and Services Tax Rules, 2017

Forum: 3B mistake

Forum: Excise duty credit on finished stock at additional place of business.

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Manpower Service provider

Forum: Construction of single unit bungalow

Forum: Duty Drawback & Input Credit - under GST

Article: SIMPLIFIED E-WAY BILL UNDER GST

Article: SERVICES UNDER REVERSE CHARGE UNDER GST REGIME

Highlight: Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017 - Notification

Highlight: Companies (Acceptance of Deposits) Second Amendment Rules, 2017 - Notification

Highlight: Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed by Circular 26/2017-Cus dated 1st July, 2017 and Circular 36/2017 dated 28 th August, 2017. reg. - Circular

Highlight: Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20 - Public Notice

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Circular: Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20

Notification: Companies (Acceptance of Deposits) Second Amendment Rules, 2017

Notification: Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017

News: Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

Circular: Promote the officers of the Indian Revenue Service (Customs and Central Excise) to the grade of Principal commissioner of customs, GST & CX

Circular: Allocate the charges amongst the Members of the Central Board of Excise and Customs



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version