TMI Blog2018 (5) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... i) M/s. Maniprabha Impex Pvt Ltd, which all essentially were controlled and managed by Rajesh Jain Group. He observed that Dharmichand Jain (DJ)had admitted, during the search and seizure proceedings carried out u/s 132 of the Act, that the group was merely providing accommodation entries. He invoked the provisions of section 133(6) of the Act. All the three suppliers relied on the book entries, bills, bank statements in support of their claim of genuine sales made to the assessee. However, the AO rejected the said explanation and proceeded to make addition of ₹ 14. 99 Crores to the income of the assessee. 3. During the appellate proceedings, the assessee filed copies of the affidavits of the suppliers and relied on various decisions against the said additions on account of bogus purchases. On hearing the same and after obtaining the remand report of the AO on the said affidavits, he partly allowed the appeal of the assessee. In his order, CIT (A) held that the addition of entire purchases is not sustainable and relied on the jurisdictional High Court judgment in the case of Nikunj Eximp Enterprises (372 ITR 619). He further held that restricting the addition to 12. 5% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the genuineness of such sales. It is also a fact that suppliers were paying VAT and were filing their returns of income. In response to the notices issued by the AO, under section 133(6) of the Act, the supplier had admitted the genuineness of the transaction. Here, we would like to refer to order of the Tribunal in the case of Romila M. Nagpal (supra), wherein in the similar circumstances, addition confirmed by the FAA were deleted. In that order, the tribunal had referred to the case of M/s. Imperial Imp Exp. (ITA No. 5427/Mum/2015 A. Y. 2009-10). In Imperial Imp Exp. matter, the assessee was exporting goods. The relevant portion of the order of reads as under: 2. Effective Ground of appeal is about addition made to her income with regard to purchases. The AO received an information from the investigation wing that the sales tax department, Govt. of Maharashtra had made enquiries about bogus purchases/hawala transactions. The sales tax authorities had forwarded the list of beneficiaries who had taken bills from the hawala dealers. The AO observed that assessee had purchased goods worth ₹ 1. 35crores from three parties namely Shri Garnesh Trading (Rs. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties, that the supplier were not found at the given addresses, that it was a case of purchases made form bogus parties rather than a case of bogus purchases, that without making purchases it was not possible for assessee to complete the sales, that the AO had rightly invoked the provisions of section 147, that he was justified in making the disallowance of ₹ 16. 99 lakhs. Finally, he dismissed the appeal filed by the assessee. 4. During the course of hearing before us the Authorised Representative (AR) submitted that the assessee had filed all necessary details before the AO, that stock register and quantitative details were made available to the AO, that payments were made through banking channels. He referred to the cases of Shri Mahesh Shah (ITA No. 5194/Mum/2014 A. Y. 2010-11); M/s. Imperial Imp Exp. (ITA No. 5427/Mum/2015 A. Y. 2009-10); Shri Ramila Pravin Shah (ITA No. 5246/M/2013 A. Y. 10-11); Shri Deepak Popatlal Gala (ITA No. 5920/Mum/2013 A. Y. 2010-11, dated 27/3/2015); Ramesh Kumar and Co. (ITA No. 2959/Mum/2014 A. Y. 2010-11 dated 28/11/2014); Shri Rajeev G. Kalathil (ITA No. 6727/Mum/2012 A. Y. 2009-10 dated 20/08/2014);Shri Ganpatraj A. Sangh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties amounting to ₹ 77, 51, 496/-. Accordingly, the Assessing Officer brought to tax the profit margin in relation to such non-genuine purchases, which he computed by applying the rate of 12. 5% on the total amount of ₹ 77, 51, 496/-, which came to ₹ 9, 68, 937/-. 3. 1 The plea of the assessee before the Assessing Officer as well as before the CIT(Appeals) was that the purchases in question were duly supported by the bills of purchase. Moreover, the assessee pointed out that all its sales were by way of exports and that there was no evidence to say that the purchases in question were bogus. The assessee also referred to his bank statement to prove payments to such parties. The details of goods sold by the assessee was also furnished, which corresponded to the purchases effected from such four parties. The CIT(Appeals) has primarily affirmed the stand of the Assessing Officer based on the information stated to have been received from the Investigation Wing of the Department relating to the finding of the Maharashtra VAT Department. Additionally, the CIT(Appeals) also noticed that assessee could not prove the existence of the suppliers and, therefore, the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 13, 67, 640/-; Subhlaxmi Sales Corp. - ₹ 20, 20, 800/-; Dharshan Sales Corporation -Rs. 9, 64, 656/-; and Paras (India)- ₹ 33, 98, 400, totalling to ₹ 77, 51, 496/- have been treated to be bogus based on the purported enquiries conducted by the Sales Tax Department of the Government of Maharashtra. Ostensibly, the Assessing Officer ought to have brought on record material which is relevant to the transactions of the assessee with the aforesaid four parties instead of making a general observation about the information received from the Sales Tax Department of the Government of Maharashtra. Quite clearly, the Assessing Officer as well as CIT(Appeals) have taken note of the fact that no sales could have been effected by the assessee without purchases. In the present case, assessee has explained that all its sales are by way of exports. The books of account maintained by the assessee show payment for effecting such purchases by account payee cheques and also the vouchers for sale and purchase of goods, etc. Notably, no independent enquiries have been conducted by the Assessing Officer. Under identical circumstances, our Co-ordinate Benches in the cases of Deepak Pop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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