TMI Blog2019 (4) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... ntend that addition of 2% is warranted lacks merit as each case is to be decided on its own merit keeping in view nature of product and circumstances surrounding the same. - I.T.A. No.4404 And 4405 /Mum/2017, I.T.A. No.4196 And 4202 /Mum/2017 - - - Dated:- 13-2-2019 - Shri Saktijit Dey, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Ms. Ruchi Rathod For the Revenue : Shri. Chaudhary Arun Kumar Singh ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: These are cross appeals, filed by assessee and Revenue for assessment year(s) (AY) 2009-10 and 2010-11 respectively , are directed against separate appellate order(s) both dated 30.03.2017 passed by learned Commissioner of Income Tax (Appeals)-3, Mumbai (hereinafter called the CIT(A) ) in Appeal No. CIT(A)-3/IT-116/ITO-1(3)(2)/14-15 and CIT(A)-3/IT-144/ITO-1(3)(2)/14-15 , for assessment year‟s 2009-10 2010-11 respectively, the appellate proceedings had arisen before learned CIT(A) from separate assessment order(s) dated 27.03.2014 and 28.03.2014 respectively passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 (here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the tune of ₹ 28,60,676/- from this party. Notices u/s 133(6) were served on this party and this party denied to have any transaction with the assessee during financial year 2008-09(AY 2009-10). The said party alleged in its reply to the AO that its TIN was misused for issuing bogus bills. The assessee, however, before the AO submitted copy of ledger account of this party, bank statement in support of its purchases. The AO observed that this party through its proprietor Shri Bhushan G. Shah has filed an affidavit wherein he averred to be issuing bogus bills without supplying any material. The AO , therefore, treated alleged purchases of ₹ 28,60,676/- made from Shah Enterprises as bogus and added the same to income of the assessee by invoking provisions of Section 69C of the 1961 Act. 2) Purchases from Yash Impex, Kandivili The assessee had shown purchases to the tune of ₹ 41,34,364/- from this party. Notice issued by the AO u/s 133(6) to this party returned un-served. The assessee submitted that this party is supplying flex and other raw material wherein margin is very thin due to fierce competition. The assessee also submitted that this party ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplies, they were not aware from which concern they will get bill and it was as per wish of that person on whom order were placed, the bill used to come from. It was stated that the assessee never placed an order on these concerns and it was further stated that the assessee never had business relations with these concerns except receiving bills from these companies. It was also stated that the material covered by these invoices were imported material and there was no major Indian supplier for all these materials. It was further stated that the assessee was forced to buy these material from grey market and to account for purchase, the bills were obtained from these parties. The assessee in response to statement of Mr Kishor Shah, Director of the assessee submitted that it used to buy material through brokers who supplies goods at premises. The broker used to issue the bills and the assessee made the payment. It was submitted that the payments are genuine and the assessee does not know the suppliers. It was submitted that just because, the assessee does not know the supplier will not made these transactions as not genuine. The assessee duly filed copies of bank statements from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces u/s 133(6). Though the payments have been shown to be made by cheque/RTGS , the parties remained unidentified , who have not confirmed the transactions either during the assessment proceedings or during the appellate proceedings. However, since the sales have been reflected in the books of accounts, which are not being doubted by the AO, the transactions remain suspicious. In such cases, the department has taken a uniform decision keeping in view the various Tribunal judgments on the issue of book profit to further tax the income of the appellant @12.5% of the transacted amount. Since the amount in dispute is ₹ 1,07,80,426/- , on which 12.5% is calculated. Thus, an amount of ₹ 13,47,553/- is confirmed and the balance of ₹ 94,32,873/- is deleted. Therefore, Grounds No. 1 to 4 are partly allowed. 7. In the result, the appeal for A.Y. 2009-10 is partly allowed. 4. Now, both the Revenue as well the assessee have filed cross appeals before the tribunal. The assessee is aggrieved by confirmation of the additions to the tune of 12.5% of the alleged bogus purchases by learned CIT(A) while Revenue is aggrieved with non conducting of the enquiry by learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t stood dismissed vide orders dated 04.05.2018 in SLP(Civil) Diary No.(s) 12670/2018. 5. We have considered rival contentions and perused the material on record including cited case laws. We have observed that the assessee is engaged in the business of printing, designing and layout , offset printing, digital printing, inject printing, drum scanning, flex/vinyl banners, four colour positives etc. . The assessee had turnover of ₹ 5.08 crores while purchases constituted major head of expenditure being ₹ 3.79 crores. The case of the assessee was reopened by Revenue by invoking provisions of Section 147 of the 1961 Act and notices dated 14.03.2013 u/s 148 of the 1961 Act was issued to the assessee. The assessment in the case of the assessee was earlier completed u/s 143(3) vide assessment order dated 30.11.2011. The reasons for reopening of the concluded assessment was furnished to the assessee. The AO issued notice u/s 133(6) of the 1961 Act to the parties from whom the assessee made purchases . The notices issued by the AO u/s 133(6) with respect to the following parties returned unserved. The assessee could not produce these parties before the authorities below nor pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee submitted that this party is supplying flex and other raw material wherein margin is very thin due to fierce competition. The assessee also submitted that this party has closed business or relocated its business to some other place. The assessee filed copy of bank statement to show that payments were made to this party. The assessee could not produce the correct address of this party before the AO. It was observed by the AO that this party name is published by Sales Tax Authorities as one who has issued false bills without delivery of goods as a hawala dealer‟ and the assessee is listed as beneficiaries of these transaction. The AO added the said alleged bogus purchases to the tune of ₹ 37,85,392/- from Jain Corporation as income of the assessee being unexplained expenditure u/s 69C of the 1961 Act. The Revenue also conducted survey u/s 133A of the 1961 Act on the assessee‟s premises on 19.12.2012. During course of survey proceedings u/s 133A, statement of Director of the assessee namely Shri Kishor Shah was recorded. The copy of said statement was given by the AO to the assessee. Shri Kishor Shah had stated in his statement that the assessee used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Remand Report. The assessee had claimed that purchases were made from brokers and then bills used to come from brokers in favour of different parties to whom payments were made and the assessee never got opportunity to verify authenticity of the persons supplying material but however it was claimed that the very goods were sold on which income was offered to tax in the return of income. . The learned CIT(A) then restricted the addition to 12.5% of alleged bogus purchases by estimating profits embedded in the said alleged bogus purchases. As we have seen that the findings are there that goods so purchased were sold by the assessee and under these circumstances, profits embedded in these alleged bogus purchases has to be estimated. It is also averred by the Director of the assessee Mr Kishor Shah in statement recorded on 19.12.2012 that the assessee used to buy material from grey market and bills were procured from these brokers. It is also averred by said Directors that these are imported material and there are hardly any suppliers in India for supply of the material covered by these invoices. These parties from whom the assessee allegedly made purchases have filed an affidavit/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a best judgment assessment, there is always a certain degree of guess work. No doubt the authorities concerned 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, and it is the assessee himself who is to blame as he did not submit proper accounts. In our opinion, there was no arbitrariness in the present case on the part of the income-tax authorities. Thus, there is no force in this appeal, and it is dismissed accordingly. No costs. Under these circumstances keeping in view nature of goods / industry in which the assessee is dealing and keeping in view that goods involved are imported being purchased from grey market who had brought these goods in Indian market without payment of custom duties , it will be fair and reasonable to estimate profits embedded in these purchases to the tune of 25% ( twenty five percentage) of the alleged purchases as income to be brought to tax over and above what was declared by the assessee in its books of accounts to cover advantage it got by way of inflated purchase pric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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