TMI Blog2017 (11) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... NT MEMBER For The Assessee : Shri N . Jayendran For The Department : Ms . Arju Garodia ORDER PER C . N . PRASAD ( JM ) 1. This appeal is field by the Revenue against the order of Learned Commissioner of Income Tax (Appeals) -13, Mumbai dated 23.11.2016 for the Assessment Year 2009-10. 2. The only grievance of the Revenue in its appeal is Ld.CIT(A) erred in deleting the addition of ₹.43,67,589/- on account of bogus purchases. 3. Briefly stated the facts are that, the assessment in this case was reopened u/s. 147 of the Act based on the information received from the Sales Tax Department and DGIT(Investigation), Mumbai wherein they have gathered that some business men have indulged in acceptance of the bogus purchases bills from the hawala bill providers. As per the information the assessee is one of the beneficiaries of such bogus purchases bills issued by various parties. Based on this information the assessment was reopened u/s. 147 of the Act and in the course of re-assessment proceedings the assessee was required to prove the genuineness of the purchases made from various parties referred to in Page No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infirmity in the tax calculations and payment to the department and in fact Sales Tax Department has given clean chit to the assessee. The Learned Counsel for the assessee submits that all the necessary information as required by the Assessing Officer including the invoices, copies of ledger account, delivery challans, confirmations, bank statement etc were filed and all these evidences goes to shows that the purchases were genuine. Learned Counsel for the assessee further submits that assessee s turnover is around ₹.22 Crores during this Assessment Year and the Assessing Officer treated the purchases of only ₹.43 Lakh as bogus purchases. Learned Counsel for the assessee submits that assessee having a turnover of ₹.22 Crores there is no need for recording bogus purchases of ₹.43 Lakhs. He further submits that the Gross Profit rate shown by the assessee is 38% and the net profit is at 7.41%. Learned Counsel for the assessee further referring to Page No.20 of the Paper Book submits that the Sales Tax Department had in fact allowed set off of taxes and the party wise details were given to show that the purchases are genuine and they did not avoid payment of Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai ) dated 7th October 2014 ( order no . ASO / Mum - VAT - E - 714 / 1314 / 4159281 ) the appellant had claimed a set - off of 42 . 54 lakhs in its Sales Tax return . However, set - off only to the extent of 40 . 7 lakhs had been determined as per the said assessment order . A copy of the said assessment order has been placed on the appellate record as part of the paper - book . Subsequently as per the order of Shri S . N . Mane, JCST ( A ) dated 30th October 2015 ( order no . JC / App / Vl / VAT - 508 / 14 - 15 / B - 3457 ) , the set - off determined in appeal was 42 . 17 lakhs . In other words, while the appellant had made a claim of set - off of 42 . 54 lakhs, the set - off had been determined in appeal at ₹ . 42 . 17 lakhs . It would hence appear that the total amount of set - off as claimed by the appellant was ₹ . 42 . 54 lakhs, while set - off granted to it in appeal was 42 . 17 lakhs, thus leaving set - off of ₹ . 0 . 37 Lakh which had not been granted even in appeal . It would hence become apparent that though not a clean chit, the Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any third party evidence in the form of either any lorry receipt or any octroi receipt, as has been explained by him in paragraph no . 6 . 3 ( v ) of his order . To my mind, it is clear that the appellant has more than discharged its onus by producing extensive documentation viz, copies of ledger accounts, bank statements evidencing account payee cheque payments, confirmations from the concerned parties, invoices and delivery challans . Thus, on a factual basis, I am of the considered view that the appellant had more than adequately discharged its onus to demonstrate the genuineness of the purchases made . 3 . 3 . 3 Several courts have held that non - confrontation of the assessee and mere non - production of the supplier cannot be held against the assessee when it comes to additions made on the basis of declarations stated to have been made before the Sales Tax authorities . For instance, the Hon'ble Jodhpur Tribunal in the case of Jagdamba Trading Company [ 2006 -( ID2 ) GJX - 0689 - TJOD ] had struck down an addition on account of bogus purchases made from allegedly bogus parties which had never been made subject - matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TJ 395 ) , the Hon'ble Jodhpur Tribunal had held that additions made on the basis of observations made by the Sales Tax authorities without making independent inquiries could not be sustained . This is precisely what has happened in the case under consideration . 8. Further, the Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [355 ITR 290] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view has been taken by the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth [38 taxman.com 385]. Simply because the parties were not produced the entire purchases cannot be added as held by the Bombay High Court in the case of CIT v. Nikunj Eximp [216 Taxman.com 171]. However, at the same time keeping in view the nature of business of the assessee and the fact that the assessee is making some local purchases without any transportation bills lorry receipts etc, the possibility of making purchases in gray market on cash cannot be ruled out. Therefore, keeping in view the n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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