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TMI Blog2018 (1) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in law, the Ld. Commissioner of Income-tax (Appeals) [hereinafter referred to as Ld. CIT(A)] erred in confirming the addition of Rs. 7,51,074/- on account of alleged bogus purchases. 2. Without prejudice to foregoing ground of appeal while considering quantum of purchases Ld. CIT(A) and Learned Assessing Officer [Ld. AO] erred in not considering the correct quantum of alleged bogus purchases at Rs. 59,83,592/- instead of Rs. 60,08,592/- considered by both Ld. AO and Ld. CIT(A)." 3. That the order of Ld. CIT(A) is bad in law and on facts. 4. The Appellant craves leave to add or amend the foregoing grounds of appeal." 2. Briefly stated, the facts of the case are that the assessee who is engaged in the business of manufacturing of furniture had filed his return of income for A.Y. 2008-09 on 12.02.2014, declaring an income of Rs. 55,55,920/-. Survey proceedings under Sec. 133A of the Act were carried out at the premises of the assessee on 01.02.2013. The assessee during the course of the survey proceedings admitting that he had made bogus purchases of Rs. 2,52,23,634/- from various parties, therefore, made a disclosure of Rs. 2,52,23,634/- for A.Ys 2007-08, 2008-09, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases from the aforesaid parties. The A.O observed that despite sufficient opportunity the assessee neither placed on record any document in order to support of the genuineness of the purchases, viz, lorry receipts, octroi receipts, transport receipts, brokers/third party evidence etc, nor produced either of the aforesaid parties. It was further gathered by the A.O that the aforementioned parties had admitted before the Sales tax authorities that they had issued only accommodation entries. The A.O further observed that the assessee had failed to even prove that the cheques issued towards purchase consideration were deposited in the bank accounts of the aforesaid parties from whom the goods were claimed to have been purchased. The A.O being of the view that the assessee had failed to discharge the onus cast upon him and prove the genuineness of purchases made from the aforesaid parties, therefore, holding a conviction that as the assessee in his statement recorded under Sec. 133A during the survey proceedings had admitted the purchases as bogus and offered the same as his income for the year under consideration, therefore, it could safely be concluded that the purchases claimed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) observed that the assessee had produced the stock register, wherein the purchases made from the aforesaid parties were duly recorded. The CIT(A) further took note of the fact that the sales corresponding to the aforesaid purchases which were duly recorded in the books of account of the assessee were not rejected by the A.O. The CIT(A) observed that in the backdrop of the aforesaid facts, it could safely be concluded that the assessee had purchased the goods, though not from the aforementioned parties, but from the Open/grey market. The CIT(A) on the basis of his aforesaid observations concluded that the addition in the case of the assessee was liable to be restricted to the profit involved in making of such purchases from the open/grey market. The A.O on the basis of his aforesaid observations, relying on the judgment of the Hon'ble High Court of Gujarat in the case of Commissioner of Income Tax Vs. Simit P. Sheth 356 ITR 451 (Guj) worked out the profit as regards the bogus purchases made by the assessee @12.5% of the alleged purchases of Rs. 60,08,592/-, and thus restricted the addition to Rs. 7,51,074/- in the hands of the assessee. 5. The assessee being aggrieved with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the genuineness of the purchases and issued letters under Sec. 133(6) to the aforesaid supplier parties, which however were returned unserved. The A.O in the mean time also gathered information that the aforesaid parties had admitted before the Sales tax authorities that they had only provided accommodation entries and not made any genuine sales of goods. The A.O brought to the notice of the assessee that the notices issued to the supplier parties were returned unserved, and thus called upon him to substantiate the genuineness of the purchase transactions. However, as the assessee failed to discharge the onus as stood cast upon him to prove the authenticity of the purchase transactions, and failed to place on record any evidence as regards the same, viz. lorry receipts, octroi receipts, third party/brokers evidence, as well as the fact that the payment made through banking channels of the purchase consideration was credited in the bank accounts of the aforesaid supplier parties, therefore, the A.O being of the view that the purchases were not genuine, thus added the entire alleged purchase amount of Rs. 60,08,692 to the income of the assessee. We find that on appeal, though the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Sales tax authorities that they had merely provided accommodation entries and had not carried out any genuine sales, however, independent of the aforesaid facts, the CIT(A) had sustained the addition primarily for the reason that the assessee had failed to substantiate the genuineness of the purchase transactions by placing on record supporting documentary evidence. We find that the CIT(A) after appreciating the fact that the purchases were recorded in the stock register and the corresponding sales of the same had been accepted by the A.O, therefore, had fairly concluded that the addition in the hands of the assessee was liable to be restricted to the extent of the profit element involved in making of the purchases, which could safely be concluded to have been made by the assessee from the Open/grey market. We thus finding ourselves to be in agreement with the well reasoned view of the CIT(A), therefore, uphold the same. The Ground of appeal No. 1 is dismissed. 8. That as regards the claim of the assessee that the lower authorities had erred in taking the quantum of the alleged bogus purchases at Rs. 60,08,592/- as against Rs. 59,83,592/-, we find that the aggregate of the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Notice under Sec. 148, dated 31.03.2013 was issued to him. The assessee submitted that his original return of income filed on 30.09.2009 may be treated as a return of income filed in compliance to Notice under Sec. 148. 12. The A.O during the course of the assessment proceedings observed that the though the assessee had made a disclosure of Rs. 1,52,99,514/- towards bogus purchases for the year under consideration during the course of the survey proceedings, however, he had not offered the same in his return of income. The A.O called upon the assessee to explain as why the amount of Rs. 1,52,99,514/- disclosed by him for the year under consideration during the course of the survey proceedings may not be added to his income. The A.O brought to the notice of the assessee his statement recorded under Sec. 133A during the course of the survey proceedings, wherein he had made a disclosure of bogus purchases of Rs. 1,52,99,514/- pertaining to the following parties: S.No. Particulars 1. Manav Impex Rs. 47,10,000/- 2. Amar Enterprises Rs. 32,84,500/- 3. Sagar Enterprises Rs. 32,16,582/- 4. Aradhana Corporation Rs. 35,00,432/- 5. Global Trade Impex Rs. 2,62,500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed in terms of our observations recorded in the appeal of the assessee for A.Y. 2008-09, marked as ITA No. 4214/Mum/2015. ITA No. 4216/Mum/2015 A.Y. 2010-11 16. We shall now take up the appeal of the assessee for A.Y. 2010- 11, wherein the assessee assailing the order of the CIT(A) had raised the following grounds of appeal before us: "1. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals) [hereinafter referred to as Ld. CIT(A)] erred in confirming the addition of Rs. 2,90,793/- on account of alleged bogus purchases. 2. That the order of Ld. CIT(A) is bad in law and on facts. 3. The Appellant craves leave to add or amend the foregoing grounds of appeal." 17. Briefly stated, the facts of the case are that the assessee who is engaged in the business of manufacturing of furniture had filed his return of income for A.Y. 2010-11 on 13.10.2010, declaring an income of Rs. 13,52,750/-. The case of the assessee was taken up for scrutiny assessment under Sec. 143(2). Survey proceedings under Sec. 133A of the Act were carried out at the premises of the assessee on 01.02.2013. The assessee during the course of the survey pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver from the Open/grey market. The CIT(A) on the basis of his aforesaid observations, therefore, restricted the addition to the extent of the profit that the assessee would have made from purchasing the goods from the Open/grey market, as in comparison to the regular market on the basis of which those were booked in the books of accounts, and relying on the judgment of the Hon'ble High Court of Gujarat in the case of Simit P. Sheth (supra), therein worked out the profit element involved in making of such purchases by the assessee from the Open/grey market @12.5%% of the purchase value of Rs. 23,26,351/- and restricted the addition to Rs. 2,90,793/-. 15. The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. We find that the facts and the issue involved in the present appeal are the same, as were involved in the aforesaid appeal of the assessee for A.Y. 2008-09, marked as ITA No. 4214/Mum/2015, therefore, our order passed in the said case shall apply mutatis mutandis to the present appeal of the assessee for A.Y. 2010-11, marked as ITA No. 4216/Mum/2015. Thus, the appeal of the assessee is dismissed in terms of our observations recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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