TMI Blog2018 (2) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... ty has taken a reasonable, which requires no interference. Contention of the Ld. counsel for the assessee, that GP of last ten year was not more than 4% is concerned, it depends upon the facts of the each case and probably in other years there may not be allegation of bogus purchases and each year is independent. No material was produced before this Tribunal contradicting the factual finding recorded in the impugned order. - Decided against assessee Addition u/s 68 - Held that:- Neither before the Ld. Commissioner of Income Tax (Appeal) nor before this Tribunal, no evidence was produced by the assessee in support of his claim. Thus, considering the factual matrix, no infirmity is found in the conclusion of the Ld. Commissioner of Income Tax (Appeal), resultantly, this ground of the assessee is having no merit, therefore, dismissed. - ITA No.4185 And 4186/Mum/2017 - - - Dated:- 19-12-2017 - Shri Joginder Singh, Judicial Member For The Assessee : Shri Piyush D . Parekh For The Revenue : Ms . N . Hemalatha - DR ORDER These two appeals are by the assessee against the impugned orders both dated 16/02/2017 of the Ld. First Appellate Authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the statement was recorded, wherein, the assessee was confronted with the evidences found from certain parties from whom the assessee claimed to have made purchases. The relevant portion of the statement and the list of non-genuine purchases are mentioned in the assessment orders. The assessee in its profit and loss account of proprietor concern M/s Karunal Steel has debited purchases of ₹ 7,07,60,216.59/-. The assessee was asked to file the details of the parties from whom purchases were made. The Sales Tax Department also conducted independent enquiries in each of the Hawala Parties and it was found that these parties were engaged in providing accommodation entries only without actual delivery of goods. In order to ascertain the genuineness of the transactions, independent enquiries were carried out and notices u/s 133(6) were issued to the concerned parties. These notices were returned unserved by the postal authority with the remark not known and no such party exist at the given address . The Inspector of the Department was also deputed to obtain information with respect to genuineness of the purchases and also to serve the notices. The Inspector vide report dated 07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly leads to the conclusion that these parties were perhaps creation of the assessee itself for the purpose of banking purchases into books of account because the purchases with bills were not feasible . Thus, the abovenoted parties become conduit pipes between the assessee - firm and the sellers of the raw materials . Under the circumstances, it was not impossible for the assessee to inflate the prices of raw materials . Accordingly, an addition at the rate of 25 per cent . for extra price paid by the assessee than over and above the prevalent price is fair and reasonable and we accordingly confirm the finding of the Commis sioner of Income - tax ( Appeals ). 12 . Thus, it is apparent that both the Commissioner ( Appeals ) and the Tribunal have concurrently accepted the finding of the Assessing Officer that the apparent sellers who had issued sale bills were not traceable . That goods were received from the parties other than the persons who had issued bills for such goods . Though the purchases are shown to have been made by making payment thereof by account payee cheques, the cheques have been de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat High Court in CIT vs Bholanath Poly Fab. Pvt. Ltd. (2013) 355 ITR 290 (Guj.) held/observed as under:- 5 . Having come to such a conclusion, however, the Tribunal was of the opinion that the purchases may have been made from bogus parties, nevertheless, the purchases themselves were not bogus . The Tribunal adverted to the facts and data on record and came to the conclusion that the entire quantity of opening stock, purchases and the quantity manufactured during the year under consideration were sold by the assessee . Therefore, the purchases of the entire 1,02,514 metres of cloth were sold during the year under consideration . The Tribunal, therefore, accepted the assessee's contention that the finished goods were purchased by the assessee, may be not from the parties shown in the accounts, but from other sources . In that view of the matter, the Tribunal was of the opinion that not the entire amount, but the profit margin embedded in such amount would be subjected to tax . The Tribunal relied on its earlier decision in the case of Sanket Steel Traders and also made reference to the Tribunal's decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain degree of guess work . No doubt, the authorities should try to make an honest and fair estimate of the income even in a best judgment assessment and should not act totally arbitrarily but there is necessarily some amount of guess work involved in a best judgment assessment . 8 . Examining the facts of the present case in the light of the aforesaid decisions, the decision of the Tribunal, being based on an estimate, does not give rise to any question of law so as to warrant interference . 9 . In so far as the proposed questions ( C ) , ( D ) and ( E ) are concerned, the same are similar to the proposed question ( A ) wherein the Tribunal has restricted the addition to 25 per cent . on similar facts . In the circumstances, for the reasons stated hereinabove, the said grounds of appeal do not give rise to any question of law . 10 . As regards the proposed question ( B ) which pertains to the deletion of addition of Rs . 7,88,590 made on account of inflation of expenses paid to Metal and Machine Trading Co . ( MMTC ) , the Assessing Officer has found that MMTC was a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived at by the Tribunal is based on concurrent findings of fact recorded by the Commissioner ( Appeals ) as well as the Tribunal . It is not the case of the Revenue that the Tribunal has taken into account any irrelevant material or that any relevant material has not been taken into consideration . In the absence of any material to the contrary being pointed out on behalf of the Revenue, the impugned order being based on concurrent findings of fact recorded by the Tribunal upon appreciation of the evidence on record, does not give rise to any question of law in so far as the present ground of appeal is concerned . 14 . In relation to the proposed question ( F ) which relates to the deletion of addition of Rs . 44,54,426 made on account of purchase of crane and allowing depreciation on the same, the Assessing Officer observed that the assessee had purchased a crawler crane for an amount of Rs . 24,61,000 excluding the cost of spare parts of Rs . 14,98,490 . The Assessing Officer after examining the evidence on record and considering the explanation given by the assessee, made addition of Rs . 44,54, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of disallowing the same and adding the same to the income would not arise . Moreover, in the absence of any evidence to indicate that the purchase was bogus or that the crane in fact did not exist, the question of disallowing the deprecation in respect of the same also would not arise . When the assessee had conclusively proved the purchase and existence of the crane, and had not debited the expenses to the profit and loss account, no addition could have been made in respect of the purchase price nor could have depreciation been disallowed in respect thereof . The Tribunal was, therefore, justified in deleting the addition as well as disallowance of depreciation . 17 . In the light of the aforesaid discussion, it is not possible to state that there is any legal infirmity in the impugned order made by the Tribunal so as to warrant interference . In the absence of any question of law, much less, a substantial question of law, the appeal is dismissed . 2.6. The Hon'ble jurisdictional High Court in the case of CIT vs Ashish International Ltd. (ITA No.4299/2009) order dated 22/02/2011, observed/held as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because the suppliers have not appeared before the Assessing Officer or the Commissioner of Income - tax ( Appeals ) , one cannot conclude that the purchases were not made by the respondent - assessee . The Assessing Officer as well as the Commissioner of Income - tax ( Appeals ) have disallowed the deduction of Rs . 1 . 33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them . We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of Rs . 1 . 33 crores was not bogus . No fault can be found with the order dated April 30, 2010, of the Tribunal . 2.8. The Hon'ble Gujarat High Court in CIT vs M.K. Brothers (163 ITR 249) held/observed as under:- Being aggrieved by the aforesaid order, the assessee went in second appeal before the Tribunal . It was urged on behalf of the assessee that the transactions in question were normal business transactions and the assessee had made payments by cheques . The parties did not come for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity ( FAA ). Before him it was argued that assessee had filed copies of bills of purchase from DKE and NBE, that both the suppliers were registered dealers and were carrying proper VAT and registration No . s, that ledger accounts of the parties in assessee's books showed bills accounted for, that payment was made by cheques, that a certificate from the banker giving details of cheque payment to the said parties was also furnished . Copies of the consignment, received from the Government approved transport contractors showing that material purchased was actually delivered at the site was furnished before the AO . It was also argued that some of the material purchased from the said parties were lying part of closing stock as on 31 . 03 . 2009 as per the statement submitted on record . After considering the assessment order and the submissions made by the assessee, FAA held that the transactions were supported by proper documentary evidences, that the payments made to the parties by the assessee were in confirmation with bank certificate,t hat the suppliers was shown as default under the Maharashtra VAT Act could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no evidence of movement of goods . But, in the case before us, there is nothing, in the order of the AO, about the cash traial . Secondly, proof of movement of goods is not in doubt . Thererfore, considering the peculiar facts and circumstances of the case under appeal, we are of the opinion that the order of the FAA does not suffer from any legal infirmity and there are not sufficient evidence on file to endorse the view taken by the AO . So, confirming the order of the FAA, we decide ground no . 1 against the AO . 2.10. The ratio laid down in the case of M/s Neeta Textiles vs Income Tax Officer 6138/Mum/2013, order dated 27/05/2013, Shri Jigar V. Shah vs Income Tax Officer (ITA No.1223/M/2014) order dated 22/01/2016, M/s Imperial Imp. Exp. vs Income Tax Officer ITA No.5427/Mum/2015, order dated 18/03/2016 supports the case of the assessee and the conclusion drawn in the impugned order. However, as relied by the Ld. DR, the Hon'ble Gujarat High Court in the case of N.K. Industries Ltd.,etc vs DCIT (supra) considering various decisions decided the issue in favour of the Revenue and the Hon'ble Apex Court dismissed the SLP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of the Department, no such parties were found existing at the given addresses. In such a situation, considering the factual matrix and the judicial pronouncements discussed in earlier paras of this order, I am of the view that the First Appellate Authority has taken a reasonable, which requires no interference. So far as, the contention of the Ld. counsel for the assessee, that GP of last ten year was not more than 4% is concerned, it depends upon the facts of the each case and probably in other years there may not be allegation of bogus purchases and each year is independent. No material was produced before this Tribunal contradicting the factual finding recorded in the impugned order. Thus, on this ground, I find no merit in the claim of the assessee, resultantly, for both years, being on identical facts/issues, the ground raised by the assessee is dismissed. 3. The next common ground raised by the assessee pertains to addition of ₹ 4,12,416/-(Assessment Year 2010- 11) and ₹ 6,74,040/- (Assessment Year 2011-12) made u/s 68 of the Act. The crux of the argument on behalf of the assessee that complete cash books should have been examined by the Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7)(291 ITR 278)(SC). A close reading of section 68 and 69 of the Act makes it clear that in the case of section 68, there should be credit entry in the books of account whereas in the case of 69 there may not be an entry in such books of account. The law is well settled, the onus of proving the source of a sum, found to be received/transacted by the assessee, is on him and where it is not satisfactorily explained, it is open to the Revenue to hold that it is income of the assessee and no further burden lies on the Revenue to show that income is from any other particular source. Where the assessee failed to prove satisfactorily the source and nature of such credit, the Revenue is free to make the addition. The principle laid down in Ganpati Mudaliar (1964) 53 ITR 623/A. Govinda Rajulu Mudaliar (34 ITR 807)(SC) and also CIT vs Durga Prasad More (72 ITR 807)(SC) are the landmark decisions. The ratio laid down therein are that if the explanation of the assessee is unsatisfactory, the amount can be treated as income of the assessee. The ratio laid down in Daulat Ram Rawatmal 87 ITR 349 (SC) further throws light on the issue. In the case of a cash entry, it is necessary for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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