TMI Blog2020 (12) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Appeal of the revenue is dismissed. - ITA Nos. 3514 to 3516 And 3518/MUM/2019 - - - Dated:- 11-11-2020 - Shri M Balaganesh (Accountant Member) And Shri Ravish Sood (Judicial Member) For the Assessee : None For the Revenue : Shri Tharian Oommen, D.R ORDER PER BENCH: The captioned appeals filed by the revenue are directed against the respective orders passed by the CIT(A)-21, Mumbai, dated 08.03.2019, which in turn arises from the assessment orders passed by the A.O under Sec. 143(3) r.w.s 147 for A.Y. 2009-10, A.Y.2011-12 and A.Y. 2012-13 AND under Sec. 143(3) for A.Y. 2013-14. As common issues are involved in the captioned appeals, therefore, the same are being taken up and disposed off by way of a consolidated order. We shall first advert to the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also furnished submissions to support his claim of having made genuine purchases from the aforesaid parties. However, the A.O not being satisfied with the explanation of the assessee added the amount of the impugned purchases of ₹ 2,69,38,787/- as an unexplained expenditure within the meaning of Sec.69C of the Act. Resultantly, the assessment was framed by the A.O vide his order passed under Sec. 143(3) r.w.s 147, dated 30.03.2015 at a total income of ₹ 3,38,66,260/-. 4. Aggrieved, the assessee assailed the assessment before the CIT(A). It was observed by the CIT(A) that the A.O had stamped the impugned purchases as bogus, for the reason, that the parties from whom the same were claimed to have been made figured in the list of the suspicious dealers enlisted by the Sales Tax Department, Government of Maharashtra. In fact, the aforesaid conviction of the A.O was further fortified by the fact that the notices which were issued to the aforementioned parties under Sec. 133(6) were either returned back or no reply was received. Also, the fact that the assessee could not substantiate the movement of goods by placing on record the delivery challans and lorry receipts w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved by the CIT(A), the vigilance department had also levied penalty and had made the requisite deductions as and where any deficiency was noticed as regards the work executed by the assessee. Apart from that, it was noticed by the CIT(A) that the assessee had maintained complete quantitative details and stock records which were examined by the A.O during the course of the survey proceedings as well as in the course of the assessment proceedings. Also, it was noticed by the CIT(A) that the books of accounts of the assessee were duly audited by a chartered accountant and no deficiency was therein reported. In the backdrop of the aforesaid facts, it was observed by the CIT(A) that though the A.O had disallowed the impugned purchases, however, the corresponding sales credited in the profit and loss account were accepted by him. Also, it was observed by the CIT(A) that the assessee had made the payments for the impugned purchases through account payee cheques only. In the course of the appellate proceedings, the assessee in order to substantiate its claim that the goods under consideration were consumed in execution of the works contract of garden development and maintenance had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Tribunal in the assessee‟s own case and that of 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 Tribunal in the case of M/s Technotrade Impex India Pvt. ltd. (sister concern of the assessee) in ITA No.3835/Mum/2016, dated 24.01.2018 for A.Y. 2011-12; (iii) Order passed by the Tribunal in the case of M/s Technotrade Impex India Pvt. Ltd., (sister concern of the assessee) in ITA No.5382 5383/Mum/2016, dated 17.04.2018 for A.Y. 2009-10 and A.Y.2012-13; and (iv) Order passed by the Tribunal in the assessee‟s own case for A.Y. 2010-11 in ITA No. 5220/Mum/2014, dated 10.08.2017. It was inter alia observed by the CIT(A) that his predecessor while disposing off the assessee‟s appeal for A.Y. 2010-11 wherein identical facts were involved, had estimated the addition with respect to bogus purchase made by the assessee in the garden maintenance and development contract segment of his business by adopting a gross profit rate of 12%. Accordingly, the CIT(A) observing that the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No. Name of the party Amount (in Rs.) 1. Maharashtra Trading 99,33,184 2. Mahavir Corporation 5,74,600 3. Omkar Steel Centre 29,76,896 4. P.K. Trading Co. 24,075 5. Parsvanath Enterprises 2,33,072 6. Pearl International 50,21,252 7. Samarth Sales Syndicate 77,33,748 8. Swastik Sales Agency 1,33,376 9. Nidhi Industries 3,08,584 Total 2,69,38,787 As per the records, the notices issued by the A.O under Sec. 133(6) to the aforementioned parties were either returned unserved or no reply was received from them. In order to verify the genuineness and veracity of the impugned purchases which were claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnotrade Impex India Pvt. ltd. (sister concern of the assessee), ITA No.3835/Mum/2016, dated 24.01.2018 for A.Y. 2011-12; and (iii) Order of the Tribunal in the case of M/s Technotrade Impex India Pvt. Ltd, (sister concern of the assessee) in ITA No.5382 5383/Mum/2016, dated 17.04.2018 for A.Y. 2009-10 and A.Y.2012-13. Also, support was drawn by the CIT(A) from the order passed by the Tribunal in the assessee‟s own case in ITA No. 5220/Mum/2014, dated 10.08.2017 for A.Y. 2010-11, wherein under identical circumstances the Tribunal had upheld the order of the CIT(A) as regards restricting the addition to the extent of the estimated profits involved in making of the unverified purchases by the assessee. Apart from that, the Tribunal had concurred with the manner in which the CIT(A) had estimated the profit element involved in making of purchases by the assessee from unverified sources i.e by considering the G.P rate declared by the assessee in comparison to the normal acceptable G.P rate that was estimated by him. For the sake of clarity the view taken by the CIT(A) is being reproduced as under: 8.12 In the present case, I find that the appellant has declared gross profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in directing the Assessing Officer to restrict the addition of ₹ 4,19,59,365/- made on account of bogus purchase ignoring the fact that the assessee during the course of survey proceedings as well as during the course of assessment proceeding 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. CIT(A) erred in directing the Assessing Officer to restrict the addition made on account of bogus purchases ignoring the fact that i 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 he restored. 4. The appellant craves leave to add, amend or alter all or any of the grounds of appeal which may be necessary. 11. Briefly stated, the assessee had e-filed his return of income for A.Y. 2011-12 on 27.08.2011, declaring a tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Tribunal in the case of M/s Technotrade Impex India Pvt. ltd. (sister concern of the assessee) in ITA No.3835/Mum/2016, dated 24.01.2018 for A.Y. 2011-12; (iii) Order passed by the Tribunal in the case of M/s Technotrade Impex India Pvt. Ltd, in ITA No.5382 5383/Mum/2016, dated 17.04.2018 for A.Y. 2009-10 and A.Y.2012-13; and (iv) Order passed by the Tribunal the assessee‟s own case for ITA No. 5220/Mum/2014, dated 10.08.2017 for A.Y. 2010-11. It was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantification 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), we find, that he had after relying on the view taken by his predecessor had therein adopted the G.P rate in respect of the trading segment of the assessee at 10% and that of the garden development and maintenance segment at 12%. For a fair appreciation of the issue under consideration we herein cull out the observations of the CIT(A), as under: 8. 12 In the present case, I find that there are basically three types of transactions whereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis for the estimation 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 ₹ 5,69,49,153/- made on account of bogus purchase ignoring the fact that the assessee during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sivmani Traders Pvt. Ltd. 3,49,938 12. Sudha Corporation 6,74,144 13. Swastik Corporation 15,18,500 14. Hariom Enterprises 58,800 Total 5,69,49,153 As the assessee could not substantiate the genuineness and veracity of the aforesaid purchases transactions, the A.O, therefore, added the entire amount of the impugned purchases of ₹ 5,69,49,153/- as unexplained expenditure under Sec.69C of the Act. 19. On appeal, the CIT(A) restricted the addition to the extent of the estimated profit which the assessee would have made from making purchases from unverified suppliers. Further, for the purpose of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made by purchasing the goods from unverified parties, we find, that the CIT(A) had adopted the gross profit rate that was adopted by his predecessor while disposing off the appeal of the assessee for A.Y. 2010-11, and that of his related parties, as a yardstick for working out the same. Accordingly, on the basis of the gross profit rate declared by the assessee in his various business segment during the year under consideration, viz.(i) cloth trading; and (ii) garden development and maintenance segment, as against that adopted by his predecessor while disposing off the appeal of the assessee for A.Y.2010- 11 as well as the those in the case of its related parties which thereafter had been upheld by the Tribunal, the CIT(A) had worked out the estimated addition in the hands of the assessee. In our considered view, the CIT(A) had adopted a logical basis for estimating 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods from unverified sources; and (ii) estimation of the profit by comparing the gross profit rate declared by the assessee in his various business segments as against that adopted by his predecessor in the assessee‟s own case for A.Y.2010-11 and that of his related parties, we uphold the same. 22. Resultantly, finding no merit in the appeal of the revenue, we dismiss the same. A.Y: 2013-14 ITA No.3514/Mum/2019 23. We shall now take up the appeal of the revenue for A.Y. 2013-14. The revenue has assailed the impugned order on the following grounds of appeal before us: 1. Whether the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in directing the Assessing Officer to restrict the addition of ₹ 17,97,935/- made on account of bogus purchase ignoring the fact that the assessee during the course of survey proceedings as well as during the course of assessment proceeding 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. Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the addition in the hands of the assessee was liable to be restricted only to the extent the assessee had inflated the purchases made from unverified parties. In sum and substance, the CIT(A) was of the view that the addition in the hands of the assessee was liable to be restricted only to the extent the assessee would had benefited by purchasing the goods at a discounted value from the unverified parties. Observing, that the assessee had duly substantiated that the impugned purchases of goods/items under consideration were in fact consumed while executing the works contract, the CIT(A) was of the view that there was no justification in making an addition of the entire value of the impugned purchases as the corresponding sales were duly accounted by the assessee in his books of accounts. The view taken by the CIT(A) was further fortified by the fact that the assessee had maintained complete quantitative details and stock records which were examined by the A.O during the course of the survey as well as in the assessment proceedings. Accordingly, the CIT(A) in the backdrop of his aforesaid observations concluded that the addition in the hands of the assessee was liable to be res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods from the open/grey market, and thereafter, only for the purpose of routing the same through his books of accounts had procured accommodation bills from the aforementioned parties. Be that as it may, we concur with the view taken by the CIT(A) that as the sales corresponding to the impugned purchases had been accepted by the department, therefore, it can safely be concluded that the assessee had purchased the goods though not from the aforementioned parties but from the unverified suppliers operating in the open/grey market. 28. As regards the quantification of the profit (on estimate) insofar the impugned purchases are concerned, we find, that the CIT(A) following the view taken by his predecessor while disposing off the appeal in the assessee‟s own case for A.Y.2010-11, had therein adopted the gross profit rate of 12% as a yardstick. The CIT(A) while concluding as hereinabove, had observed, that the view taken by his predecessor in A.Y.2010-11 was thereafter upheld by the Tribunal in ITA No.5220/Mum/2014, dated 10.08.2017, and the appeal of the department was dismissed. Accordingly, the CIT(A) taking cognizance of the fact that in A.Y. 2010-11 his predecessor had a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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