TMI Blog2019 (4) TMI 1858X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit percentage of 12.5% its approved in BHOLANATH POLY FAB PVT LTD. [ 2013 (10) TMI 933 - GUJARAT HIGH COURT] on the bogus purchases made by the appellant during each year. - Order passed by CIT(A) confirmed. - ITA Nos.2377 & 2378/Ahd/2015, C.O. Nos.186 & 187/Ahd/2015 - - - Dated:- 5-4-2019 - Pramod Kumar, VP and Ms. Madhumita Roy, JM S.K. Dev for the Revenue S.N. Soparkar for the assessee ORDER Pramod Kumar, 1. These two appeals, and the related Cross Objections challenge the order dated 27th May 2015, passed by the learned CIT(A), in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 for the assessment years 2009-10 and 2010-11. 2. Grievances raised in the appals, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have been made by disallowing the purchases made from those parties. The appellant has made following purchases from the parties which were involved in issue of bogus bills in two different years as under: - A.Y.2009-10 Sr. No. Name of the Hawala Party Amount involved (Rs.) 1 DHARMESH TRADING COMPANY 13,83,471 2 JAIN CORPORATION 17,36,445 3 KRSNA ENTERPRISES 13,73,964 4 0M ENTERPRISE 20,99,599 5 YASH IMPEX 24,41,674 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued bills to the parties from whom it has done construction work. It is also noted that the appellant has been showing consistent GP ratio in earlier years. The GP ratio of the years under appeal are also in line with the earlier years. The appellant has given a chart showing the GP which is reproduced hereunder for the sake of clarity: - Financial Year Turnover (in lacs) Gross Profit Ratio Net profit Ratio 2008-09 3061.03 601.68 19.66% 72.64 2.37% 2009-10 3081.97 562.47 18.25% 89.13 2.89% 2010-11 652 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the bill from somebody else. In these circumstances, it would not be appropriate to disallow the entire purchases as the appellant has consumed the raw material and there is no inflation in purchases. It would, therefore, be proper to tax a reasonable percentage of total purchases made for which the bills have been found to be bogus. The view finds supports from the following judgements: - i. CIT v Sathyanarayan P. Rathi (2013) 351 ITR 150 (Guj.) :- Section 143 of the Income-tax Act, 1961 - Assessment - Additions to income [Purchases from market] - Assessment year 2003-04 - Assessing Officer made addition of entire amount of purchase on ground that concerned suppliers had never supplied goods as named by assessee - Commissioner (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chases were not bogus but were made from parties other than those mentioned in books of account, only profit element embedded in such purchases could be added to assessee's income - Held, yes - Whether hence, order of Tribunal needed no interference - Held, yes [Paras 6, 7 9] [In favour of assessee] Even in the case of the appellant firm the purchases though not verifiable the utilization of the material has been explained. iii. CIT v Bholanath Polyfab (P) Ltd. (2013) 355 ITR 290 (Guj.):- Section 69 of the Income-tax Act, 7967 - Undisclosed investments [Bogus purchases] - Assessment year 2005-06 - Assessee was engaged in business of trading in finished fabrics - Assessing Officer found that concerned parties from whom materia ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
