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TMI Blog2020 (11) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessment was reopened U/s. 147 of the Act based on the information received from DGIT(Inv.), Mumbai, that the assessee has availed accommodation entries from M/s. Navratan Impex who is said to be providing accommodation entries without there being transportation of any goods. In the reassessment proceedings, the assessee was required to prove the genuineness of the purchases made from M/s. Navratan Impex. Assessee furnished Profit and Loss Account and details of purchase parties and submitted that the purchases made are genuine. Assessee further submitted that the payments are made through account payee cheques as such contended that all the purchases are genuine. However, parties were not produced before the Assessing Officer and no explanation was offered. 3. Not convinced with the submissions of the assessee the Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there being any transportation of materials and the assessee might have made purchases in the gray market. It is the finding of the Assessing Officer that the assessee failed to produce the alleged party and assessee record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... domain in the website of the Sales tax Department being the hawala operators. It is not a case that the assessee is not maintaining the stock record, rather it is a case where the assessee is duly reconciling the quantitative details in respect of the purchase and sales. Therefore, in our opinion, the fact remains that he assessee would have made the purchases but not from the alleged parties. It is a case where the purchases would have been made from the grey market and when the purchases are being made from the grey market naturally the assessee would have saved not only the sales tax but also would have got the purchases at a lower rate. No doubt, in the case of M/s. Steel Line (India), this Tribunal in ITA 1321, 1322, 1323/Mum/2016 vide order dated 29.08.2017 has restricted the addition to the extent of 2% of such purchases. We have gone through the said order of the Tribunal and noted that it has been held as under: "Against the above order of CIT(A), both assessee and revenue are in further appeal before us. We have considered rival contentions and carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed bogus purchases is that the assessee would have made purchases from the grey market and by making the purchases from the grey market the assessee would have saved taxes may be in the form of excise duty and sales tax, which is being shared between the seller and the buyer. Not only this, in our view, the assessee would never buy the material from the grey market until and unless there is saving in the cost of material. The learned AR before us even though submitted a comparative chart in respect of various decisions, which were referred to by the CIT(A) while estimating income on such alleged bogus purchases @17.5%, we do not agree with the contention of the assessee because in our opinion, whatever the assessee claims deduction for a expenditure, onus is on the assessee to prove the genuineness of the expenditure. Before us no cogent material or evidence was produced or referred to which may prove that the purchases made by the assessee form the alleged parties were genuine. The 'C' Bench of this Tribunal, as has been pointed out during the course of hearing, in the case of Modern Road Maker in ITA No. 4734/Mum/2016 vide order dated 24.10.2014, to which the VicePresident was on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee were not utilized for transportation of material or that some vehicles number provided by assessee belongs to the Government authorities and some to the private parties. The private parties have denied to have rendered any services to the assessee or to the dealer. One of the vehicles was tanker and one tipper. The assessee could not provide the slip of weight at the time of delivery. The assessing officer disallowed the entire purchases of Rs. 33,37,54,424/- from Karma Industries Ltd. The assessing officer rejected the documentary evidences furnished by the assessee. The assessing officer disbelieved the certificate of consumption issued by Engineer appointed by NHAI. The assessing officer has not brought any material on recorder to discard the evidences furnished by the assessee. The assessing officer examined two Engineers with regard to the certificate issued by them. The assessing officer has not given any adverse finding nor pointed out any infirmity in their report about the consumption of the material.No other verification of site or the projects were carried by the assessing officer. The estimated consumption of the material in the project being executed by ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncluded that there are good and sufficient reasons to hold that so far as project of Surat- Dahisar and Kolhapur are concerned, the purchase of steel cannot be treated as bogus. (para 6.3.8 of ld CIT(A) order) However, the ld Commissioner (Appeals) concluded that such purchases are made from the parties other than those mentioned in the books of accounts and the profit element embedded therein needs to be brought to tax. The ld. Commissioner (Appeals) further concluded that such purchases are made only to save 10% Excise duty and cess levied thereon at 2% and sustained the disallowance at 12.5% of the purchases shown for Surat- Dahisar and Kolhapur. The ld AR for the assessee while making his submission before argued that the assessee is engaged in execution of Infrastructure project and the rate ofVAT for steel applicable for such purchased is 4% and that the assessee has already paid the same on all purchases. This fact was not disputed by ld.DR for the revenue. In our view, the disallowance of purchases of steel at12.5% is on higher side, when the ld. Commissioner (Appeals) has concluded that the purchases of steel for Surat- Dahisar and Kolhapur cannot be treated bogus. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bombay High Court in Hariram Bhambani supra, the disallowance of cost of purchases of steel is restricted to 5% of the impugned purchases only. The assessing officer is directed accordingly. In the result the ground no.1 of the appeal is partly allowed." We noted in the aforesaid case, where the Tribunal has directed the Assessing Officer to estimate the profit @5% on the alleged bogus purchases has duly given the reasons for estimating the profit 2%% while we noted in the case of M/s. Steel Line (India) (supra), the Tribunal has not given any reason in its order as to why the profit should be estimated @2% of alleged bogus purchases. Since the Tribunal in the case of Steel Line India has not given any reason and has not looked into the aspect why the assessee will buy the material from the grey market, this decision in our opinion, will not be binding on us. Since in the case of M/s. Modern Road Maker Pvt. Ltd. the Tribunal has given the reasons, respectfully following the same, direct the Assessing Officer to estimate the profit @5%. Since in all the appeals filed by the assessee the issue involved is common, we therefore following the decision for A.Y. 2006-07 direct the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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