TMI Blog2017 (11) TMI 1941X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the assessee. - I.T.A. No. 567/MUM/2016, I.T.A. No.534/MUM/2016 - - - Dated:- 27-11-2017 - SHRI P. K. BANSAL, VP AND SHRI AMARJIT SINGH, JM For the Assessee : Shri Suresh Anchaliya For the Department : Shri Purushottam Kumar (SR. DR) ORDER PER AMARJIT SINGH, JM: The assessee as well as revenue have filed the above mentioned appeals against the order dated 30.11.2015 passed by the Commissioner of Income Tax (Appeals)-30, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the assessment year2010-11. ITA NO.567/M/2016:- 2. The assessee has filed the present appeal against the order dated 30.11.2015 passed by the Commissioner of Income Tax (Appeals)-30 Mumbai, [hereinafter referred to as the CIT(A) ] relevant to the assessment year 2010-11. 3. The assessee has raised the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in applying 12.50% of the purchases as profit embedded on the purchase of ₹ 2,95,54,220/- without appreciating the fact that the payment was made through cross account payee cheque and the same goods were subsequently sold and quantity is tallied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chanchal Tube Corporation 27460355491V ₹ 24,50,000/- ₹ 17,78265 5 Asian Steel 27860346638V ₹ 86,46,371/- ₹ 5812586 6 Suraj Tube Corporation 27550304371V - ₹ 30,62,186 Total ₹ 1,56,94,884/- ₹ 1,38,59,336/- Thereafter, the notice was given to the assessee to prove the genuineness of the purchases but the assessee failed to do so, therefore, the peak credit to the tune of ₹ 61,07,205/- in M/s Phenolek Steel Engg. Co. and peak credited of ₹ 1,02,28,611/- in M/s United Metal Industries amounting to the tune of ₹ 1,63,35,816/- was treated as unexplained expenditure u/s 69C of the Act. Therefore, the same was added to the income of the assessee and the income of the assessee was assessed to the tune of ₹ 1,73,80,520/-. Feeling aggrieved the assessee filed an appeal before the CIT(A) who restricted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mitigate the burden cast upon him in so far as proving the genuineness of the transaction from the said are concerned In this regard it is also pertinent to mention that while dealing with the concept of burden of proof, onus of proving is always on the person who makes the claim and not on the Revenue, as being made out by the Ld. AR in his submission. The onus to prove that apparent, is not the real one, is on the party who claims it to be so as held by the Hon'ble Supreme Court In the case of CIT v. Daulat Ram Rawatmull [1973] 87 1W 349 and CIT v. Durga Prasad More, In the latter case, it has been held by the Apex Court that though an apparent statement must be considered real until it was shown that there were reasons to believe that apparent was not the real, in a case where an authority relied on self-serving recitals in documents, it was for the party to establish the proof of those recitals; the taxing authorities were entitled to look into the surrounding circumstances to find out reality of such recitals. 5.6 It is also a settled legal proposition that if no evidence is given by the party on whom the burden is cast, the issue must be found against him. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made. In the case before the Hon'ble Bombay High Court in Nikunj Eximp (supra), the suppliers had not appeared before the Assessing Officer and from the judgment it appears that It was not a case of the suppliers being non-existent. However, in the present case in appeal, the alleged supplier has been found to be non-existent. This is not merely a case where the supplier has failed to appear before the Assessing Officer. Hence, the judgment of the Hon ble Bombay High Court relied upon by the appellant would be of no help, in fact, in a later decision in Nikunj Eximp (2014) 48 Taxmann.com 20 (Bom) Hon ble Bombay High Court on the very same issue of obtaining bogus bills dismissed the assesses Writ Petition filed against notice u/S. 148 of the Act. 5.9 The: appellant in his submissions also relied upon the Hon'ble JTAT, Mumba, decision in the case of Rajeev Kalathit vs. DCIT ITA No 6727/M/2012. In the case of Rajeev Hon'ble Tribunal deleted the addition on the ground that investigation was not taken to the logical end by calling for the details and verifying them properly Apart from that transportation of goods were not verified properly that case in view of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even the invoices/W1 had been prepared by the, minimum of the applicant Merely because, the applicant had been dealing, with the firm, that would not found be bogus and were no other purchases of chuni-bhusi the benefit of 'deduction of: such purchase had rightly been disallowed. 5.11 In Samurai. Software (P.) Ltd. v. Commissioner of Income-tax (2008) 299 ITR 324 (RAJ.), it was held as under: 118, The Tribunal considered the matter in Paragraph '6 of its order thus: 16. We have carefully considered the rival submission of the parties, perused the mater/al available on record and the decision relied upon by the learned representative. We find that as a result of search on the assessee-company, the purchases totalling to ₹ 4,37,048 were not found recorded in the seized books of account of the assessee-company. No 511/render was made on behalf of the company by any of the directors of the assessee-company. The surrender was made by Shri Mahesh Toshniwal, one of the directors of the company in his individual and not an behalf of the assessee-company and the sume was considered in his personal assessment Under the law, the company is a separate juridical person. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the purchases were genuine. It was live that no loan had been taken from those. The case the Assessing Officer was that the assessee claimed some purchases from some parties, whom he could not produce or those parties were not available when the summon under section 131 was issued Therefore, the initial dispute was with regard to genuineness of the transaction regarding purchase of wool from the parties, the assessee had failed to discharge the onus to prove the genuineness of the transactions, mere mentioning of section 68 did not affect the addition made when transactions were found bogus. 5.13 In Sanjay Oilcake Industries vs. Commissioner of Income-tax 2009 316 ITR 274 (GUJ), it was held as under Thus, it is apparent that both the Commissioner (Appeals) and the Tribunal have concurrently accepted the finding of the Assessing Officer that the apparent sellers who had issued sale bills were not traceable. That goads were received from the patties other than the person who had issued bills for such goods. Though the purchases are to have been made by making payment thereof by account payee cheques, the cheques have been deposited in hank account ostensibly in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made from bogus parties, nevertheless,' the purchases themse4ves were not bogus. The Tribunal adverted to the facts band data on record and came to the conclusion that the entire quantity of opening stock, purchases and the quantity manufactured during the year under consideration were 1d by. the assessee. The purchases of the entire 1,02,514 were 'sold during the year under consideration. The Hon'ble Tribunal, therefore, accepted the assesses contention that the finished goods were purchased by the assessee, may be not from the parties shown in the accounts., but from other sources. In that view, Of the matter, the Tribunal was of the opinion that not the entire amount, but the profit margin embedded in such amount would be subjected to tax. The Tribunal relied on it earlier decision in the case of Sanket Steel Traders vs. ITO [IT appeal Nos. 2801 2937 (Ahd) of 2008, dated 20-05-2011] and also made reference to the Tribunal's decision in the case of Vijay Proteins Ltd. vs. Asstt. CIT [1996] 58 ITD 428 (Ahd) On appeal by the Department, the Hon ble Gujarat High Court held as follows: 'We are of the opinion that the Tribunal committed no error. Whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased though not from named parties but other parties from grey market, partially sustained the addition as probable profit of the assessee. The Tribunal however, sustained the addition to the extent of 12.5%. Taking into account the above facts, the Hon ble Gujarat High Court held that since the purchases were not bogus, but were made from parties other than those mentioned In books of accounts, only the profit element embedded in such purchases could be added to the assesses income and as such no question of law arose in such estimation. While arriving at the above conclusion, the Hon ble Court also relied on the decision In the case of Vijay M. Mistry Construction Ltd. 355 ITR 498 (Gui) and further approved the decision of Ahmedabad Bench, ITAT in the case of Vijay Proteins 58 ITD 428. 518 In the case of Vijay Proteins (supra). the Hon'ble ITAT was seized Without suppliers of oil cakes where 33 parties were found to be bogus oy the departmental authorities even though payments were made to the said parties by cross cheques and in fact the AD. in that case had brought adequate material on record to prove that the cross cheques had not been given to parties from whom sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the facts of the assesses case the CIT(A) restricted the disallowance to 12596 a 25% mode in the case of M/s. V/jay Proteins Ltd from these facts evident that the =(A) has sustained the addition at 12.5% of the purchases considering the fads of the assessee cased We, therefore, do not find any Justifica.t/on to interfere with the order of the CJT(A) m this regard. The same is sustained. After considering the and the arguments of both the sides, we are of the opinion that it would meet ends of Justice, if the disallowance Is sustained at 12.5010 of the purchase from these two parties. The Assessing Officer is directed to work out the disallowance accordingly- Since the It s of the assessee case are identical, we respectfully following decision of the ITAT. direct the Assessing Officer 12.5% of the purchases made during the year under consideration. 5.20 As stated ear1ter,in the present case the Id A 0 $iirnsetf held that the purchases were not bogus though the party from whom then purchase were made by the appe11nt was round to be bogus and that is the reason for which they were not produced during the assessee merit proceedings. The motive behind obtaining bogu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case would be 17.5% - 50/a 7.5%. The net addition sustained would be 17.5%- 5% (GP already admitted) 125%%. AU is directed to verify the correct total purchases made from the six parties and calculate the profit as per the percentage decided as the profit element on the said purchases in addition to the regular profit offered to tax; However, the AO is directed to check the total purchases 1mm all the six parties because, it is observed from the details submitted during the present proceedings that AO committed a mistake by adopting a wrong amount as purchases made from the party M/s Asian Steel by the concern M/s. Phinolek Steel Engg. Co. the amount of total purchase is taken as ₹ 86,16,371/-, whereas as per the account copy submitted, the total purchases made during the year is Z 1,05,96,371/- from the said party. AO is directed to re-check the total purchases from all the six parties and adopt the decided percentage of profit net i.e. 12,50/o, as the profit embedded on the purchases made from these parties. Accordingly, Ground Nos. 1 to 6 are partly allowed. 6. Ground No. 7 of the appeal relates to charging of Interest u/s. 234B, 234C and 234D by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee failed to prove his purchase from the six parties whose names have been mentioned above to the tune of ₹ 1,63,44,175/-. The sale is not disputed. The assessee might have purchased the said material from the grey market to avoid the Sales Tax, VAT and Excise etc. The profit embedded in the said purchase has been taken into consideration to the extent of 12.5% in addition to the regular profit offered to tax. The CIT(A) has also considered the number of cases while deciding the matter of controversy but the yardstick taken into consideration by the CIT(A) in the case of of CIT Vs. Simit Sheth (2013) 38 Taxmann.com 385 (Guj). The percentage of profit embedded into the purchase to the extent of 12.5% has rightly been taken into consideration to the facts and circumstances of the case. Accordingly, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not required to interfere with at this appellate stage. Accordingly, this issue is decided in favour of the revenue against the assessee. ITA NO.534/M/2016:- 7. The facts of the present case are quite similar to the facts of the case as discussed in ITA. N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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