9911796707
TMI Blog2021 (9) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the parties, the appeal for the A.Y. 2006-07 is treated as lead case. The Revenue has raised the following grounds of appeal: "1. The Ld.CIT(A) has erred in law and on facts in restricting the addition to 25% of total non-genuine purchase made, following the ratio of decision Hon'ble ITAT Ahmedabad in the case of Vijay Proteins ignoring that in the case of Vijay Proteins assessee had provided quantitative details but in the instant case assessee has neither provided the quantitative details nor has got it tallied with purchase shown in the books of account. 2. The Ld.CIT(A) has erred in law and on facts in ignoring the ratio of case laws in the case of CIT vs La-Medica (2001) 250 ITR 575 (Del) by Hon'ble Delhi High Court where in it was held that since the purchase from specific party was not proved by the assessee, it cannot be claimed as business expenditure and ITAT cannot make out a case that the assessee would have made purchase from third parties which was not even claimed by the assessee itself. 3. The Ld.CIT(A) has erred in law and on facts in ignoring the ratio of the following case laws while deciding to restrict the additions, wherein it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. The assessee also stated that during the year 2006, a search was carried out by Excise Department in several units located in Daman and Silvassa. During the said survey and search, it was alleged that the material purchased was not brought to the factory premises and was not used in that form in the process of manufacturing and that CENVAT credit paid on the purchase of raw material is not allowable. The assessee specifically stated that they comply all relevant provision under the Central Excise Act, 1944 and Rules and filing regular return under the relevant provisions of Central Excise. The assessee manufactured and cleared finished goods of payment of duty. There cannot be any case of non-receipt of input because of the department cannot presume that the assessee paid duty without manufacturing and claiming the finished goods or the goods manufactured and cleared finished goods without receiving and using inputs. The officer of Director General of Central Excise (DGCEI) officers visited the assessee's factory twice, they carried out inventory of his stock and finished goods as well as input and compared the same with the stock and entered in the relevant production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A), the assessee also filed detailed statements of facts. The assessee also raised grounds that there is error in computation of deduction under section 80IA of the Act that the mistake may be corrected. The assessee in its submissions besides the other contention stated that they are in manufacturing of copper wire. For the purpose of manufacturing process requires copper readily available in the market. For the purpose of procuring high purity copper as well as low priority copper scrap are sent to rolling material, where both are melt and missed and rolled into a copper wires of the required purity. During the relevant period, the Excise Department issued show cause notice and purchased from three (03) parties aggregating to Rs. 6.45 crore were identified and CENVAT credit in respect thereof were disallowed. The Assessing Officer on the basis of those information reopened the case. The assessee in reply to show cause, furnished detailed reply. It was also stated that none of the suppliers has denied the supply of the material. All payments were made through account payee cheques. Purchases are duly recorded in the books of accounts. Finished goods are also recorded in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t consumption of raw material production is not possible and accordingly addition of entire amount of purchases is not justified. The ld. CIT(A) by following the decision of Vijay Proteins Vs. ACIT [58 ITD 428] held that in such situation restricting the addition to 25% of bogus purchases would be reasonable. Accordingly, the ld. CIT(A) upheld the addition to that extent. 5. On the deduction of 80IA, the assessee stated that on account of addition of Rs. 6.45 crore made on account of bogus purchases, the Assessing Officer has not allowed the deduction under section 80IA of the Act. The assessee is deriving profit from Small Scale Industry (SSI) located in notified area eligible to such deduction. The Assessing Officer enhanced the profit by disallowing the purchases, while allowing the deduction, the Assessing Officer committed mistake in not allowing the deduction in respect of income of industrial undertaking as assessed by him. The ld. CIT(A) after considering the submission of assessee concurred with the submission of the assessee that only source of assessee is deriving the profit from SSI unit in notified area. The AO allowed the deduction on the income disclosed, thus, acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by Excise Department on such show cause notice. The ld. Sr. Counsel submits that facts of the case of assessee is different and case of N.K. Proteins (supra). To support his submissions the ld. Sr. Counsel relied on the decisions below: i) ITAT Rajkot in ITA No.95/RJT/2013 Ganga Glazed Tiles; ii) Hon'ble Gujarat High Court in Ganga Glazed Tiles of 107 taxmann.com 108; iii) Hon'ble Gujarat High Court in Futura Ceramic Pvt. Ltd., of SCA No.1038 of 2013 and iv) Hon'ble Gujarat High Court in Kishor Amrutlal Patel of TA.A No.679 of 2010. 8. We have considered the rival submission of both the parties and have gone through the order of authorities below. The AO made additions of Rs. 6.45 Crore on account of bogus purchases on the basis of show cause notice issued by the excise department that the assessee has shown bogus purchases. We find that during the assessee, the AO made no independent enquiry. The books of accounts of assessee was not rejected. The AO has not made any investigation from the parties from whom the assessee has shown the purchases. The sales of finished goods was not disputed. The AO made addition solely on the basis of show cause notice of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of revenue leakage. Thus, we affirm the order of the ld. CIT(A). 12. In the result, the Ground No.1 to 3 of the Revenue are dismissed. 13. Ground No.4 relates to allowing deduction under section 80IA of the Act. 14. The ld. CIT(DR) for the Revenue submits that the ld. CIT(A) directed the Assessing Officer that part of purchases is disallowed, the income is enhanced, the enhanced profit is also eligible for deduction under section 80IA of the Act. The ld. CIT(DR) submits that no such ground was raised by assessee. 15. On the other hand, the ld. Sr. Counsel submits that Assessing Officer allowed deduction under section 80IA on the income disclosed, therefore, accepted that assessee was eligible for such deduction on its manufacturing activities. The Assessing Officer made addition of bogus purchases of Rs. 6.45 crore, which was ultimately restricted to 25% of such purchases. The only source of income of assessee is profit from eligible unit in notified area. The AO enhanced the profit by disallowing purchases, however, corresponding deduction was not allowed. The disallowance of such purchases amounts to enhancement of total income and the assessee is allowed for such deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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