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TMI Blog2021 (9) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% of the bogus purchases following the order in assessee's own case in AY 2013-14 without appreciating that the impugned decision was not disputed due to existing instructions of the CBDT prevailing at that time and that decision u>as never accepted in principle. 2. The appellant prays that the order of the Ld. CIT(A) be set aside and the order of the AO be restored. 3. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary." Also, the assessee is before us as a cross-objector and had objected to the order passed by the CIT(A) on the following grounds: "1. On the facts arid circumstances of the case and law, the Ld. CIT(A) erred in confirming the reopening of the assessment u/s 147/148 which is bad in law and deserves to be quashed. 2. On the facts and circumstances of the case and law, the Ld. CIT (A) erred in confirming disallowance of Rs. 6,10,585/- being 6% of suspicious purchases amount Rs. 93,93,627/-by treating the same as non-genuine. 3. The respondent craves leave to add, alter, amend, modify or delete any of the aforesaid grounds of appeal." 2. Briefly stated, the assessee who is engaged in the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase bills and the payment details qua the goods which were claimed to have been purchased from the aforementioned parties, it was, however, observed by the A.O that neither the assessee had produced the aforementioned parties for necessary examination nor furnished the complete delivery proof details pertaining to the purchase transactions in question. Backed by the aforesaid facts, the A.O holding a conviction that the asessee had not made any genuine purchases from the aforementioned parties rejected its books of account by invoking the provisions of Sec. 145(3) of the Act. Observing, that involving identical facts the CIT(A) in the assessee's own case for A.Y. 2009-10 had directed the A.O to restrict the addition in respect of the bogus purchases at 3% of the value of the impugned purchases, the A.O, thus, was of the view that as the said order of the first appellate authority had not been accepted by the revenue and had been assailed before the Tribunal, therefore, an addition qua the profit which the assessee would have made with respect to the impugned purchases which were claimed to have been made from the aforementioned non-existent parties could safely be taken at a hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the assessee had not made any genuine purchases from the aforementioned tainted parties in question, therefore, our indulgence in the present appeal is confined to quantification of the profit element which the assessee would had made by procuring the goods at a discounted value from the open/grey market. In our considered view, as stated by the ld. A.R, and rightly so, the gross profit rate of the assessee company as regards its similarly placed genuine transactions for the year under consideration can safely be adopted as a yardstick for arriving at the profit which the assessee would have made as regards the impugned purchases under consideration. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Pr.CIT -17 Vs. M/s Mohammed Haji Adam & Smith Company Ltd. (ITA No.1004 of 2016, dated 11.02.2019). In its aforesaid order, the Hon'ble High Court while upholding the order of the Tribunal, had observed, that the addition in the hands of the assessee as regards the bogus/unproved purchases was to be made to the extent of bringing the G.P rate of such purchases at the same rate of other genuine purchases. The Hon'ble High Court whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dismissed, accordingly. No order at costs." As such, the Hon'ble jurisdictional High Court had observed that the addition in respect of purchases which were found to be bogus in the case of the assessee before them, who was a trader, was to be worked out by bringing the G.P. rate of such bogus purchases at the same rate as that of the other genuine purchases. 6. Before us, the ld. A.R had submitted that the G.P rate of the asessee for the year under consideration was 9.19%. It was submitted by the ld. A.R that in case if the addition sustained by the CIT(A) @ 6% of the value of the purchases in question was sustained, then, the same would give unrealistic and unimaginable trading results in the case of the assessee for the year under consideration. Apart from that, the ld. A.R took us through the stock inventory of the assessee as on 31.03.2010, and submitted, that the entire purchases that were made from one of the party i.e M/s Mayur Exports had remained unsold and formed part of its 'closing stock' for the year under consideration. Accordingly, the ld. A.R had tried to impress upon us that now when the purchases made by the assessee from the aforementioned party, viz. M/s Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the assessee chargeable to tax had escaped assessment. In order to buttress his aforesaid claim the ld. A.R had drawn our attention to the copy of the 'reasons to believe'; Page 46 of the Assessee's Paper Book (APB). It was further submitted by the ld. A.R that the case of the assessee had been reopened merely on the basis of a borrowed satisfaction. Elaborating on his aforesaid contention, it was submitted by the ld. A.R that the A.O had merely acted upon the information that was received by him from the DGIT(Inv.), Mumbai, wherein the latter had intimated that the name of the assessee had figured as a beneficiary of the bogus purchases made from certain hawala dealers. It was submitted by the ld. A.R that neither any details as regards the nature of information nor that in respect of the alleged dealers from where the aforesaid information was gathered is discernible from the 'reasons to believe' recorded by the A.O. It was further submitted by the ld. A.R that original assessment in its case for the year under consideration was framed by the A.O u/s 143(3) r.w.s 153C, dated 27.03.2014, wherein notices u/s 133(6) were issued to majority of the supplier parties from whom pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration had been under assessed. In the backdrop of the aforesaid facts, we are unable to comprehend as to on what basis it is claimed by the ld. A.R that the 'material' on the basis of which the case of the assessee had been reopened does not have any nexus with the formation of the 'belief' by the A.O that the income of the assessee chargeable to tax had escaped assessment. Also, we are unable to persuade ourselves to subscribe to the claim of the ld. A.R that the concluded assessment of the assessee had been reopened on the basis of a borrowed satisfaction. As observed by us hereinabove, the A.O in the backdrop of the information that was received by him from the Investigation wing, Mumbai had after due application of mind validly reopened the case of the assessee. Accordingly, finding no infirmity in the validity of the reopening of the assessee's case u/s 147 of the Act, we herein reject the claim of the assessee that the A.O had invalidly assumed jurisdiction u/s 147 of the Act. The cross- objection no. 1 is dismissed. 10. The cross objection no. 3 being general is dismissed as not pressed. 11. Resultantly, the appeal filed by the revenue is dismissed, whil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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