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TMI Blog2022 (11) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ost common except variation of amount on account of addition of bogus purchases of unexplained expenditure. Therefore, all the appeals were clubbed, heard together and are decided by common order to avoid the conflicting decisions. For appreciation of fact the fact in assessment year 2009-10 in ITA No. 302/AHD/2016 are treated as "lead" case. The assessee has raised the following grounds of appeal: "1. The ld. CIT(A) has erred in law and on facts in confirming the action of ld. AO in reopening the case of the appellant u/s 147 of the Act. 2. The ld. CIT(A) has erred in law and on the facts in making addition of Rs.1,49,81,520/- on account of unexplained expenditure by treating the purchase made from M/s Prakash Trading Corporation, M/s Shankheshwar Sales Corporation and M/s Shree Keshar Impex Metal Pvt.Ltd. as bogus purchases. 3. The ld. CIT(A) has erred in law and on the facts in treating the purchase as bogus purchase ignoring the fact that genuineness of corresponding sale has not been doubted by the ld. AO. 4. Alternatively and without prejudice, only a token and not the whole of the purchase ought to have been disallowed. 5. The ld. CIT(A) ought to have appreciated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee requested for reasons recorded. The reasons recorded was provided to the assessee vide letter 05.08.201. The assessee filed its objection against the re-opening. The objection raised by assessee was disposed off / rejected vide speaking order. The Assessing Officer after rejection of such objection proceeded of re-assessment after serving notice under section 143(2) and 142(1) of the Act. During the re-assessment proceedings, the Assessing Officer recorded that assessee has shown purchases from following parties: - Sl. No Name of Party Amount (Rs) 1 Shnkeshwar Sales Corporation 1,17,72,828/- 2 Prakash Trading Corporation 22,13,786/- 3 Shree Keshar Impex Metals Private Limited 9,94,906/- total 1,49,81,520/- 4. The Assessing Officer after recording the details of bogus purchase and modus operandi of hawala operator and referring the contents of affidavit, which was filed by such entry provider before Sales Tax Department Government of Maharashtra, noted that such entry provider admitted that they have not made any genuine transaction and issued bills to the parties on commission basis @ 0.05% of bill amount. In order to verify the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed the complete details before the Assessing Officer about the purchases of material and that payments were made through banking channel. The Assessing Officer stressing upon the consumption of material and asking of inward forward and outward of the stock register and created doubt on the transaction of purchase. The Assessing Officer has accepted the corresponding sales and doubted the purchases only. The purchases were made through banking channels, if the payments were returned in cash to the assessee was never verified by the Assessing Officer. The assessee has paid value added tax (VAT) on all the purchase including on the purchases treated by Assessing Officer as bogus. The assessee relied on the various case law on the ratio of that where the supplier was declared as a hawala and the assessee proved the purchases by furnishing necessary documents, more particularly that payments were made through account payee cheque, highlighting the bank statement and the Assessing Officer has not conducted any independent inquiry and no opportunity to cross-examination of such party was given, no addition can be made. 7. The Ld. CIT(A) after considering the submission of assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present appeal before the Tribunal. 8. This appeal was filed in 2016 and assessee was seeking dates over the dates on one pretext of the other. Not a single document in the form of evidence, to substantiate various grounds of appeal is filed before the Tribunal till today. The assessee was given more than 15 opportunities on various dates from 2018. On 31 December 2021, the Ld. AR for the assessee who was appearing on behalf of assessee submitted that the assessee is not providing information and necessary document. The Ld. AR for the assessee also submitted that assessee was suffering loss and the financial institutions i.e., banker of the assessee has initiated recovery proceedings against the assessee. The business premises of assessee was also attacked by the banker of assessee under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFESI Act). The Ld. AR for the assessee also submitted that the creditors of the assessee also initiated proceedings before National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code for liquidation. After making all such submissions, the ld AR for the assessee requested to seek dischar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere raised before Ld. CIT(A) and the facts are not emanating from the order of Ld. CIT(A). Once the assessee has not challenged the addition before the First Appellate Authority (FAA) the assessee is now estopped (precluded) for raising such grounds of appeal even otherwise the addition was made on appreciation of facts and not on legal issue. The ld DR for the revenue prayed for dismissal of the appeal. 11. We have considered the submission of Ld. CIT-DR for the Revenue and perused the orders of lower authorities carefully. Ground No. 1 relates to validity of reopening. We find that case of assessee was reopened under section 147 on the basis of information received from Sales Tax Department, Mumbai that assessee is one of the beneficiary of bogus purchases from entry provider. The Assessing Officer in the assessment order has extracted the statement of such hawala operator as well as copy of their affidavit filed before sales tax authorities Mumbai. On the basis of such specific information, the assessing officer reopened the case of assessee after recording his satisfaction that income of the assessee has escaped assessment. Before Ld. CIT(A) no specific submission was made aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee and without rejecting the books of account of assessee, though the assessee could not fully substantiate the genuineness of such purchase, the entire disallowance of aggregate of purchase is not justified. In such circumstances to avoid the possibility of revenue leakage, only profit element in such purchase may be disallowed. The Assessing Officer has nowhere disputed the sales of assessee. In such circumstances a reasonable and adhock disallowance would be sufficient to avoid the possibility of revenue leakage. Considering the facts and circumstances of the case we are of the view that @ 10% of aggregate of purchase would be sufficient to avoid the possibility of revenue leakage. 14. In view of the aforesaid factual discussion, the ground Nos. 2 to 4 of assessee's appeal are partly allowed and necessary computation to follow as per law. 15. Ground No.5 relates to addition on account of disallowance of carry forward loss / unabsorbed business loss. We find that while filing the appeal before Ld. CIT(A) no such ground of appeal was raised. Therefore, thereby the assessee has raised new and additional Ground of appeal. No application for admission of additional ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowances of purchases, we have restricted to the addition to the extent of 10% of the disputed purchases, therefore following the principal of consistency, the addition of bogus purchases is party allowed. So far as additions of commission payment is concerned, keeping in view that we have restricted the addition of alleged bogus purchase to the extent of 10%, therefore, we direct to delete addition of commission payment. 24. In the result, this appeal is partly allowed. 25. Now we shall take up ITA No. 135/Srt/2018 for AY 2011-12 (assessment order under section 143(3) r.w.s 147 dated 31.03.2016). 26. The case of assessee for AY 2011-12 was reopened under section 147 on the basis of information that the assessee has availed bogus purchase entry from hawala trader namely Shreyansh Corporation and Pavitra Traders of Mumbai (same parties who were involved some other years). The assessee officer after granting opportunity to the assessee and rejecting the books of accounts of assessee and made addition of 100% purchases shown from such hawala party. The assessee has shown purchases of Rs. 50,30,508/-, hence, the assessing officer added the entire amount of to the income of assesse. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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