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2018 (7) TMI 130

SUS M/S SHRUTI GEMS [2017 (5) TMI 1485 - RAJASTHAN HIGH COURT] when sales are not doubted 100% disallowance for bogus purchase is not disallowable. Hence, we confirm the order of ld. CIT(A) in arriving at a disallowance by adopting a Gross Profit ratio of 12.50% on alleged bogus purchases - I.T.A. No.7077/Mum/2016 - 2-7-2018 - SHRI SHAMIM YAHYA, AM AND SHRI SANDEEP GOSAIN, JM For The Appellant : None For The Respondent : Ms. Aarju Garodia ORDER Per Shamim Yahya, A. M.: This appeal by the assessee is directed against order of ld. Commissioner of Income Tax (Appeals)-1, Thane dated 13.07.2016 and pertains to the assessment year 2010-11. 2. The issue raised is that ld. Commissioner of Income Tax (Appeals) erred in sustaining disallowance of 12 .....

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e business of trading in steel & scrap in the name of his proprietary concern M/s. Shree Kailash Engineering Works. Information had been received by the Assessing Officer from the Sales-tax Department, Maharashtra to the effect that the assessee was one of the beneficiaries of transactions with Hawala dealers. The assessee had shown purchases amounting to ₹ 1,04,23,000/- from the following parties: Sr. No. Name of Hawala dealer Tin of Hawala dealer PAN of Hawala dealer Amount of Bill 1 Maruti Steel Traders 27230546012V BANPS8526B 6,47,150/- 2 Shiv Industries 27680272629V AMIPS8519C 6,94,270/- 3 Laxmi Trading 27620378101V AHAPP9143L 56,63,085/- 4 Haitvi Steel Traders Pvt. Ltd. 27110361261V AABCH5536Q 2,50,016/- 5 Revati Steel Trade .....

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he genuineness of the purchases from the above listed parties and added the amount of ₹ 1,04,23,000/- to the assessee's income on account of unproved purchases. 6. Against the above order, the assessee appealed before the ld. Commissioner of Income Tax (Appeals). The ld. Commissioner of Income Tax (Appeals) confirmed the action of the assessing officer in making addition of 12.5% of the bogus purchase. 7. Against the above order of ld. Commissioner of Income Tax (Appeals), the assessee is in appeal before the ITAT. 8. We have heard the ld. Departmental Representative and perused the records. None appeared on behalf of the assessee despite notice. The last notice has returned unserved. 9. As regards the reopening of the case, on a .....

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a deposition vide statements/affidavit made before the Sales Tax Department that they were involved in. issuing bogus purchase bills without delivery of any material. There is a list of such parties wherein the assessee is stated to be beneficiary of bogus purchase bills. 10. From the above, we find that tangible and cogent incriminating material were received by the AO which clearly showed that the assessee was beneficiary of bogus purchase entries from bogus entry providers which formed the reason to believe by the Assessing Officer that income has escaped assessment. The information so received by the Assessing Officer has live link with reason to believe that income has escaped assessment. On this incriminating tangible material informa .....

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ice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction ITO v. Selected Dalurband Coal Co, (P.) Ltd. (1996) 217 ITR 597 (Supreme Court): Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (Supreme Court). 11. The above discussion and precedent from Hon ble Apex Court fully justify the validity of reopening in this case. The assessee has also raised some other issue relating to reasons for reopening. We find that these grounds were neither raised before the Assessing Officer no .....

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providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. The assessing officer has noted that there is no cogent evidence of the provision of goods. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. 13. Hence purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases, in light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. This propositi .....

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case of Vijay Proteins Ltd. Vs. Commissioner of Income Tax, Special Leave to Appeal (C) No.8956/2015 decided on 06.04.2015 whereby the Supreme Court has dismissed the SLP confirmed the order dated 09.12.2014 passed by the Gujarat High Court and other decisions of the High Court of Gujarat in the case of Sanjay Oilcake Industries Vs. Commissioner of Income Tax (2009) 316 ITR 274 (Guj) and N.K. Industries Ltd. Vs. Dy. C.I.T., Tax Appeal No.240/2003 decided on 20.06.2016, the parties are bound by the principle of law pronounced in the aforesaid three judgments. 16. Upon careful consideration we note that this is not an appeal by the Revenue. Hence, it will not be appropriate to consider and take away the relief already granted by the ld. CIT(A .....

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