TMI Blog2019 (2) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... s net income at 0.49% of its turnover. Direct AO to recompute the assessee’s income. Thus, this ground of appeal of the assessee is partly allowed. - ITA No.3454/DEL/2017 - - - Dated:- 31-1-2019 - SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The Appellant : Shri Rajiv Singhal, Adv. And Shri Ramit Kakkar, Adv. For The Respondent : Shri S.S. Rana, CIT And Shri Yogesh Sharma, Sr.D.R. ORDER PER N.S. SAINI, A. M. This is an appeal filed by the Assessee against the impugned order of learned CIT(A), Meerut dated 24.03.2017 for the Assessment Year 2013-14. The sole ground of appeal taken by the assessee in this appeal reads as under. 1. The Ld. CIT(A) has erred in sustaining disallowance of alleged bogus purchase of ₹ 5,20,15,994/-. Observation made, inferences drawn and findings recorded are against the facts and circumstances of the case. 2. The Assessing Officer observed in his order that assessee has made purchase of raw meat from 15 parties as under. 1. Mohd. Chand Rs.18,90,000/- 2. Mohd. Ashraf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- 3.1 The Assessing Officer further observed that in the following cases, summons issued under section 131 were received back unserved. S. No. Name of Party ID Transaction amount Remarks 01 Sh. Shahin s/o Sh. Bundu Blurred ID ₹ 1890000 Bar Bar Talash Karne par pata nahi chala ath vapas. 02 Mohd. Mansoor S/o Sh. Abid Ali No ID Rs.1890000 Kafi talash kiya par koi pata nahi chala kath vapas 03 Mohd. Rais No ID Rs.17864000 Kafi talash kiya par koi pata nahi chala ath vapas. 3.2 He also observed that the assessee failed to produce the parties for recording their statement. 3.3 The Assessing Officer has also observed in his order that assessee produced books of account along with self made bills and vouchers for verification and on verification several dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.4 The Assessing Officer observed that the reply of the assessee is not acceptable as the same is without any substance. Mere submission of affidavit could not prove genuineness of transaction. Even in business of procuring cattle from farmers, no one gave cattle to buyers on credit basis. It is not possible for above parties to procure cattle on consecutive days for large number of cattles. It is out of imagination that a person who neither carried out this business in past and nor after these transactions and only for 3 to 4 days in a year and for only single party M/s. GMC International, clearly proves that these parties are bogus and created for introducing bogus purchases in order to reduce the profit of assessee s business. During the assessment proceedings, one party, Raju s/o Kalava attended before him in compliance of summons u/s 131 of the Act and his statement was recorded on oath. The said party admitted that neither he knows the assessee nor he was involved ever in any business transaction with the assessee. He further stated that the assessee was involved in business of labour of marble implementation and was never involved in sale/purchase of raw meat. He also sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores and Assessing Officer has disallowed only ₹ 5.20 crore worth of purchases after verification from 16 parties. 4.1 He further observed that another argument of the Authorised Representative was that as a measure of practice in trade, which has all long been accepted by the Department also, the persons from whom the assessee purchases are generally petty traders who operated very crudely and who are generally not required to maintain any account. It is well known fact that they are small time operators from minority community majority of whom are mostly illiterate and are very hesitant to come to Income Tax Department as they hold them in fear. The vouchers are self made which the Assessing Officer has very summarily disbelieved. However, this was the trade practice which has been followed all along and is customary to the trade which has been accepted by the Department all these years, as has also been held by the Jurisdictional High Court in the case of Nisar Bidi Sikka No.1 v/s. CIT 174 taxmann 51 (Alld). The ld. CIT(A) observed that the AR of the assessee has made a generalized statement but after detailed and specific exercise of verification of parties which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw meat and the same is sold as such. So, when there is no value addition in the product and the purchase and sale in kilograms, in such circumstances, it is very easy to maintain quantitative stock tally or a stock register. Had assessee maintained proper stock register or quantitative stock tally and had he been able to relate the stock values with the dharm kanta receipts he would have had a very good case for proper purchase verification. In absence of quantitative stock tally the random use of dharm kanta receipts really did not help the assessee s case of providing credible evidence and proving that purchase are genuine. In absence of quantitative stock tally no case is made out by the counsel of assessee with regard to his argument that purchase could not be disallowed without disturbing the sales. He further observed that the argument of the Authorised Representative of assessee to compare gross profit rate with other such concerns is of little evidentiary value in so far as the Assessing Officer has not rejected the books of account and has only disallowed purchase after verification of bills of certain parties. 4.2 The other argument of the AR was that certain purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and small persons. They purchase useless live stock from farmers and get the same butchered and thereafter supplied the same to the assessee. Out of the fear of Income Tax Department, they may not have responded to the notice of the Income Tax Department. 8. He, further, submitted that for disallowance of ₹ 5,20,15,994/-, the income of the assessee was assessed at ₹ 5,30,73,994/- which on the background of turnover of the assessee of ₹ 43,01,72,740/- works out to 12.33% of the turnover. He argued that it was not practically possible to achieve such huge profit percentage. He placed before us the following comparable cases wherein for the assessment year 2013-14, the assessed income and turnover and profit percentage are as under: Name of the assessee Turnover Income assessed Net income percentage Assessed u/s Mohd Mehraj 1,01,53,78,273 12,45,190 0.122 ---- Al-Sad Trading Co. (Firm Partnership) 67,14,70,744 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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