9911796707
TMI Blog2020 (12) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... t of bogus purchases ignoring the fact that the assessee during the course of survey proceedings as well as during the course of assessment proceedings had not been able to furnish any evidence to negate these clinching evidences by producing these purchase parties with the relevant books of accounts/documents to show that the materials allegedly supplied by these hawala parties were indeed consumed 2. Whether on the facts and in the circumstances of the case and in law the Ld. C.I.T. (A) erred in directing the Assessing Officer to delete that addition made on account of bogus purchases ignoring the fact that ii is a settled provision of law that the onus is upon the assessee to prove the genuineness of the alleged purchases. 3. the appellant prays that the order of the CIT(A) on the grounds be set aside and that of the assessing officer be restored. 4. the appellant craves leave to add, amend or alter all or any of that grounds of appeal which may be necessary." 2. Briefly stated, the assessee which is engaged in the business of trading in various goods and is a contractor for garden development and maintenance had filed his return of income for A.Y. 2009-10 on 14.09.2009, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said conviction of the A.O. As observed by the CIT(A), the A.O on the basis of the aforesaid combined reasons had concluded that the impugned purchases claimed by the assessee to have been made from the aforementioned parties were not genuine and added the value of the same to the returned income of the assessee. To sum up, as observed by the CIT(A), the aforesaid addition towards bogus purchases was made in the hands of the assessee on the ground that the aforementioned parties from whom purchases were claimed by the assessee to have been made were enlisted on the sale tax website as suspicious hawala dealers and the notices issued to them by the A.O under Sec. 133(6) were either returned unserved or no reply was received in compliance thereto. At the same time, it was observed by the CIT(A) that the assessee in order to support the genuineness of the aforesaid purchase transactions had placed on record the following documentary evidence: (a) Ledger Account confirmation of all the parties alongwith copies of invoices issued. (b) Copies of purchase orders; (c) Proof of payment made by account payee cheque; (d) Sample copies of work orders issued by MCGM whereby the very sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum up, it was observed by the CIT(A) that the assessee had established that the goods so purchased from the aforementioned parties were in fact consumed while executing the BMC contract, and thus, formed part of its duly accounted sales for the year under consideration. Observing, that though the assessee had failed to discharge the onus as was so cast upon him as regards proving the genuineness of the purchase transactions with the aforementioned parties, the CIT(A) was of the view that it remained as a matter of fact borne from the records that the factum of consumption of such goods in execution of the works contract by the assessee was however proven to the hilt. Backed by his aforesaid observations, the CIT(A) was of the view that as the assessee had failed to fully discharge the onus that was cast upon him and therein substantiate the genuineness and veracity of the purchases which were claimed to have been made from the aforementioned parties, it could, thus, safely be concluded that the possibility of inflated purchases/cost could not be ruled out. In the backdrop of his aforesaid conviction, the CIT(A) was of the view that the addition in the hands of the assessee was li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther addition was called for in his case for the year under consideration. On the basis of the aforesaid observations the CIT(A) deleted the addition of Rs. 2,69,38,787/- made by the A.O. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We find that the assessee respondent despite having been put to notice about the hearing of the appeal has however failed to put up an appearance before us. Accordingly, in the backdrop of the aforesaid facts, we are constrained to proceed with as per Rule 25 of the Appellate Tribunal Rules, 1963, and therein dispose off the appeal after hearing the appellant revenue and perusing the orders of the lower authorities. 6. The ld. Departmental Representative (for short "D.R‟) relied on the order passed by the A.O. It was submitted by the ld. D.R that the CIT(A) had erred in dislodging the well reasoned order passed by the A.O. It was averred by the ld. D.R that as the assessee had failed to substantiate the genuineness of purchase transactions under consideration, therefore, the A.O had justifiably added the same to the returned income of the assessee. It was averred by the ld. D.R that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding year i.e A.Y. 2010-11, wherein identical facts as regards impugned bogus purchases were involved, had estimated a G.P rate of 12% as a yardstick in respect of the unverified purchases made by the assessee in his garden maintenance and development segment of business. Observing, that the assessee during the year under consideration had already declared a gross profit rate of 14.23% insofar the garden development and maintenance segment of his business was concerned, the CIT(A) was of the view that no separate addition was called for in the hands of the assessee. The CIT(A) while concluding as hereinabove, had observed, that the view taken by his predecessor in the assessee‟s own case for A.Y. 2010-11 was thereafter upheld by the Tribunal and the department‟s appeal was dismissed in ITA No. 5220/Mum/2014, dated 10.08.2017. In sum and substance, the CIT(A) finding that identical facts were involved in the case of the assessee for the year under consideration as were there before his predecessor in A.Y. 2010-11, had thus followed the view that was taken by the latter. Apart from that, we find that the CIT(A) had also relied upon certain orders passed in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e extent of the profit which the assessee would had made by procuring the goods from unverified parties, nor the methodology adopted by him for quantification of such profit element. In fact, we find no reason to take a view different from that arrived at by the Tribunal while disposing off the appeal in the assessee‟s own case for A.Y. 2010-11 in ITA No. 5220/Mum/2014, dated 10.08.2017. As observed by us hereinabove, the CIT(A) while disposing off the assessee‟s appeal for A.Y.2010-11 had after analyzing all the facts of the case had estimated a G.P rate of 12% in respect of the garden maintenance and development segment. The aforesaid order of the CIT(A) was thereafter upheld by the Tribunal. As in the case before us the assessee had already declared a G.P rate of 14.23% which is already more than the rate 12% as had been approved by the Tribunal in the assessee‟s own case for A.Y. 2010-11, we, therefore, finding no reason to take a different view respectfully follow the same. Accordingly, finding no infirmity in the view taken by the CIT(A) we uphold his order. 9. The appeal of the revenue is dismissed. A.Y: 2011-12 ITA No. 3516/Mum/2019 10. We shall now t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,65,994 5. Manibhadra Enterprises 13,275 6. Parsvanath Enterprises 11,953 7. Parsvanath Enterprises TG 71,748 8. Pearl International 2,61,44,693 9. Royal Enterprises 70,830 10. Royal Enterprises TG 4,07,093 11. Sambhav Traders 15,29,907 12. Vatika Trading Company 6,22,460 13. Sunico Traders 4,02,370 14. Arihant Traders 1,02,120 15. Amrutlal Sales Pvt. Ltd. 34,160 16. Sivamani Traders Pvt. Ltd. 7,97,690 17. V3 Enterprises 65,75,553 Total 4,19,59,365 As the assessee failed to discharge the onus that was cast upon him insofar proving to the hilt the genuineness of the purchase transaction under consideration was concerned, the A.O, therefore, added the same as an unexplained expenditure under Sec. 69C of the Act. 13. On appeal, the CIT(A) after exhaustive deliberations and observations recorded in the body of his order, therein noticed that a similar issue was involved in the case of the assessee and his related parties, viz. (i) Order passed by the Tribunal in the case of Shri Kishore Agarwal (assessee‟s brother) in ITA No. 870 & 871/Mum/2015, dated 25.01.2017 for A.Y. 2010-11 and A.Y. 2011-12; (ii) Order passed by the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact, the assessee by not assailing the order of the CIT(A) any further before us, had thus, admitted to the fact of unverifiability of the impugned purchases. Issue before us is confined to two aspects, viz. (i) that as to whether the CIT(A) is right in restricting the addition to the extent of profit which the assessee would had made by procuring goods at a discounted value from the unverified suppliers; and (ii) that as to whether the quantification of profit by the CIT(A) is justified. As the sales corresponding to the impugned purchases had duly been accounted by the assessee in his books of accounts, and the same after verification had been accepted by the department, therefore, we concur with the view taken by the CIT(A) that the addition as regards such impugned purchases was liable to be restricted only to the extent of the profit which the assessee would had made by purchasing such goods at a discounted value from the unverified suppliers. Accordingly, we find no infirmity in the view taken by the CIT(A) that the disallowance of the entire amount of the impugned purchases was not called for in the hands of the assessee. On a careful perusal of the order of the CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imation carried out by the CIT(A) is the gross profit rate adopted by his predecessor while disposing off the appeal in the assessee‟s own case for A.Y.2010-11 and that of his related concerns, which thereafter had been upheld by the Tribunal. In the backdrop of the aforesaid facts we find no infirmity insofar the methodology adopted by the CIT(A) for estimating the profits which the assessee would have made from carrying out the purchases from unverified suppliers. In fact, finding no reason to take a different view from that arrived at by the coordinate bench of the Tribunal that was followed by the CIT(A), we uphold his order. 15. Resultantly, the appeal filed by the revenue is dismissed. A.Y: 2012-13 ITA No.3515/Mum/2019 16. We shall now take up the appeal of the revenue for A.Y. 2012-13. The revenue has assailed the impugned order on the following grounds of appeal before us: "1. Whether on the facts and in the circumstances of the case and in Iaw the Ld. C.I.T. (A) erred in directing the Assessing Officer to restrict the addition of Rs. 5,69,49,153/- made on account of bogus purchase ignoring the fact that the assessee during the course of survey proceedings as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f quantification of the profit which the assessee would have made by procuring the good the CIT(A) followed the view that was taken by his predecessor while disposing off the assessee‟s appeal for A.Y. 2010-11. It was noticed by the CIT(A) that the view taken by his predecessor was thereafter affirmed by the Tribunal in its order passed in ITA No. 5220/Mum/2014, dated 10.08.2017. Also, the CIT(A) drew support from the view taken by his predecessor in the case of certain related parties of the assessee. On the basis of his aforesaid deliberations the CIT(A) confined the addition in respect of the two business segments from unverified parties during the year under consideration by estimating the gross profit which the assessee would had made from carrying out purchases from unverified sources, viz. (i) cloth trading: 10%; and (ii) garden development and maintenance: 12%. Accordingly, the CIT(A) restricting the addition to the extent of the shortfall in the disclosed gross profit rate of the assessee, therein scaled down the addition to an amount of Rs. 32,00,099/-. 20. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. Admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imating the profit which the assessee would had made by booking purchases from unverified sources in his books of accounts. For a fair appreciation of the view taken by the CIT(A), we herein reproduce his observations as under: "7.12 In the present case, I find that there are basically two types of transactions whereby such purchases parties could not be verified; (1) Cloth Trading items and (2) Garden Maintenance contract. Further, my predecessor CIT(A) vide order dated 30.05.2014 for AY. 2010-11 in assessee's own case, has already considered the identical issue of bogus purchases and has adopted a gross profit rate of 12% for garden development and maintenance contract after analyzing all the facts of the case in detail and such gross profit rate of 12% has also been upheld by Hon'ble ITAT, with respect to cloth trading items considering the facts and circumstances and the decisions of the Hon'ble ITAT & CIT(A) and the AR's arguments during the appellate proceedings, stating that these items were trading items and GP would not be at the rate of other items. During the year, the appellant was also engaged in cloth trading items and considering the nature of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. C.I.T. (A) erred in directing the Assessing Officer to restrict the addition made on account of bogus purchases ignoring the fact that it is a settled provision of law that the onus is upon the assessee to prove the genuineness of the alleged purchases. 3. The appellant prays that the order of the CIT(A) on the grounds be seaside and that of the assessing officer be restored. 4. The appellant craves leave to add, amend or alter all or any of the grounds of appeal which may be necessary." 24. Briefly stated, the assessee had e-filed his return of income for A.Y.2013-14 on 16.09.2013, declaring his total income at Rs. 55,31,610/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 25. On the basis of information gathered in the course of the survey proceedings conducted under Sec. 133A at the business premises of the assessee as well as during assessment proceedings, it was observed by the A.O that the assessee had claimed to have made purchases aggregating to Rs. 17,97,935/- from the following 5 parties: Sr. No. Name of Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uppliers, and thus, inflated the corresponding purchases on the basis of accommodation bills procured from the aforesaid hawala parties. It is a matter of fact borne from the records that the assessee had established that the impugned purchases were consumed in the course of his business and formed part of his duly accounted sales. In fact, as observed by the CIT(A) the sales accounted for by the assessee in his books of accounts were verified by the A.O and had not been doubted or dislodged by him. Apart from that, the fact that the assessee had in the course of the survey and the assessment proceedings produced the quantitative stock records further strengthens the view taken by the CIT(A) that the assessee had actually purchased the goods under consideration. However, as the assessee had failed to substantiate his claim of having purchased the goods from the aforementioned parties whose names had figured in the list of the hawala parties as prepared by the Sales Tax Department, Maharashtra, therefore, a very heavy onus was cast upon him to establish the genuineness of the impugned purchases beyond any scope of doubt. However, we are in agreement with the view taken by the lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: "7.11 In the present case, I find that my predecessor CIT(A) vide order dated 30.05.2014 for A.Y 2010-11 in assessee‟s own case, has already considered the identical issue of bogus purchases and has adopted a gross profit rate of 12% for garden development and maintenance contract after analyzing all the facts of the case in detail and such gross profit rate of 12% has also been upheld by Hon'ble ITAT. I do not f ind any reason to deviate from the view taken by my predecessor and accordingly, 1 compute the profit on the transaction vis-à-vis profit declared by the appellant in the table given below and work-out the disallowance as under:- Particulars Sales/Contract Amount (Rs.) Estimated G/P rate (in %) Estimated G/P (Rs.) G/P declared (Rs.) Addition to be confirmed (Rs.) Garden Development & Maintenance 6,16,03,935 12% 73,92,472 72,42,249 1,50,223 Total 6,16,03,935 73,92,472 72,42,249 1,50,223 Apart from that, the CIT(A) while concluding as hereinabove had also taken cognizance of a similar view that was adopted by his predecessor while disposing off the appeals in the case of certain related parties of the assessee, viz. (i) Or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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