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ACIT, Central Cirle-1 (1) , Ahmedabad Versus Deep Cotton Industries, Prop. of Nitesh Gunvantilal Thakkar

2017 (11) TMI 321 - ITAT AHMEDABAD

Bogus purchases - quantification of disallowance on account of bogus purchase - Held that:- AO himself has admitted the fact of existence of purchase albeit from unregistered dealers who do not have bill books. Simultaneously, the corresponding sales have also not been disputed. Noticeably, the assessee has recorded total sales to the tune of ₹ 323.43 lakhs during the year and recorded purchase of ₹ 401.88 lakhs including impugned purchases of ₹ 209.49 lakhs from M/s.Vishal Tra .....

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come of the assessee. We thus do not find any potency in the plea of the assessee for further relief towards downward estimation. - I.T.A. No.948/Ahd/2012 And I.T.A. No.1460/Ahd/2012 - Dated:- 2-11-2017 - SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For The Revenue : Shri K.Madhusudan, Sr.DR For The Assessee : Shri M.J. Shah, AR ORDER PER PRADIP KUMAR KEDIA - AM: The captioned cross-appeals by the Revenue and Assessee are directed against the common order of t .....

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of total addition of ₹ 2,09,49,678/- made on account of bogus purchases. 2) On facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the entire addition of ₹ 2,09,49,678/- made on account of bogus purchases. Assessee s Appeal in ITA No.1460/Ahd/2012 - AY 2008-09 3. Likewise, grounds of appeal raised by the assessee is also reproduced hereunder: 1. The Assessing Officer has erred in law as well as on facts by making addition amounting to ₹ 2,09, .....

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ed in law as well as on facts by applying the rate of 25% of the alleged bogus purchases for confirming the bogus purchases without any specific evidence or law. 4. The Assessing Officer has erred in law as well as on facts by initiation of penalty proceedings u/s.271(1)(c) for concealment of income without any specific evidence or law. 4. Since both the appeals are inter-connected and concerns the common issue of addition towards bogus purchases, both the appeals are disposed of together. 5. Br .....

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income for AY 2008-09 on 30/09/2009 declaring a total income of ₹ 1,49,610/-. The return filed by the assessee was subjected to scrutiny assessment. It was observed by the AO that in the course of search proceedings and survey proceedings in the case of Edible Oil Mills group, it was found that one M/s. Vishal Traders Virpur, Dist.Kheda had issued bogus/adjustment bills to a large number of concerns of Mehsana and Patan districts of Gujarat during Financial Year 2006-07 onwards. The Assess .....

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nt bills only. It was further confessed by the purported supplier that he has not delivered any goods like oil seeds, oil cakes or any other item mentioned in the bill to various parties including the assessee. The transportation details like vehicle numbers written on the bill etc. were also admitted as fictitious. It was further deposed by the proprietor that one Shri Madanlal L.Shah (Chandak) had introduced all the parties to him. It was pointed out that the bogus bills were issued to various .....

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s substantiated by continuous pattern of deposit and withdrawal. The AO further observed that the statement of proprietor was confirmed in the statement of Shri Madanlal L.Shah dated 22/09/2010. In the aforesaid statement intermediary Shri Madanlal L.Shah has stated that he had introduced various traders to purported supplier who only issued bogus adjustment bills without any delivery of goods. In this regard, the statement of Shri Kamleshbhai G.Thakkar (Power of Attorney holder of the assessee) .....

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ss-examined on behalf of the assessee. The copy of the proceedings recorded were also provided to the assessee which has remained uncountered. The AO finally noted that in spite of number of opportunities granted to the assessee to explain the issue of bogus purchases/accommodation entries, the assessee has failed to discharge the onus lay upon him. The purchase register/sale register/stock register for the relevant period were not produced nor quantitative correlation between purchase and sales .....

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titative tally of items purchased, consumed and sold was stated to be submitted before the CIT(A). The CIT(A) took note of the statement made by the supplier adverse to the assessee and finally arrived at the conclusion that the impugned transactions with M/s.Vishal Traders are only an eye-wash and the bills issued by the purported supplier are in effect accommodation bills. The CIT(A) however, observed that while the purchases were not made from M/s.Vishal Traders, the existence of purchases ca .....

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scale down and restrict the addition made towards bogus purchases from M/s.Vishal Traders to the extent of 25% of ₹ 2,09,49,678/- which comes to ₹ 52,37,420/-. The balance addition to the extent of 75% was thus deleted. 8. Both AO as well as the assessee are aggrieved by the partial relief granted by the CIT(A). While the AO, on one hand, has challenged the direction to delete 75% of the bogus purchases made from M/s.Vishal Traders, the assessee was impugned the sustenance to the ex .....

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L.Shah. Shri M.L.Shah was also cross-examined by the representative of the assessee without any success. The assessee could not substantiate the alleged fact of purchase from supplier M/s.Vishal Traders by producing lorry receipts etc. The payment made by the assessee towards the purported supply was found to be withdrawn immediately in cash. These facts when read together gives an unambiguous and unflinching impression of assessee indulging in camouflaging the book results by introducing bogus .....

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hand, challenged the sustenance of disallowance of ₹ 52,37,420/- out of purchases made from M/s.Vishal Traders. The ld.AR submitted that the Revenue has wrongly placed reliance on the statement of the third party to draw inference against the Assessee in violation of principles of natural justice. The Ld.AR also simultaneously pleaded that estimation of 25% of alleged bogus purchase towards alleged suppressed income is highly excessive and not in accord with decision of Hon ble Gujarat Hi .....

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plier was the same i.e. M/s.Vishal Traders. The Ld.AR thereafter referred to the decision of the Hon ble Gujarat High Court in the case of N.K. Industries Ltd.(supra) cited on behalf of the Revenue and submitted that the Ld.DR has misunderstood the conclusion of dismissal arrived at by the Hon ble Gujarat High Court. The Ld.AR submitted that addition on account of bogus purchases was retained at 25% only by the ITAT which was subject matter of consideration before Hon ble High Court under s.260A .....

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as admitted the fact of existence of purchase albeit from unregistered dealers who do not have bill books. Simultaneously, the corresponding sales have also not been disputed. Noticeably, the assessee has recorded total sales to the tune of ₹ 323.43 lakhs during the year and recorded purchase of ₹ 401.88 lakhs including impugned purchases of ₹ 209.49 lakhs from M/s.Vishal Traders. Apparently, in the absence of actual purchases made from unknown unregistered dealers, it will not .....

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cision of the Hon ble Gujarat High Court in the case of Sanjay Oilcake Industries(supra). The assessee, on the other hand, seeks lower estimation on the basis of another decision of the Hon ble Gujarat High Court in Jagdish H. Patel(supra) whereby the estimation of 8% determined by the Tribunal was approved. Contextually, we find that the assessee has remained defiant despite substantive evidence on record which unmasked the fictitious or accommodation bills. The probable purchases made from unr .....

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