TMI Blog2023 (1) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... by procuring the goods at a discounted value from the open/grey market can safely be determined by bringing the G.P rate of such bogus purchases at the same rate as that of the other genuine purchases. We, thus, in terms of our aforesaid observations restore the matter to the file of the A.O, with a direction to restrict the addition in the hands of the assessee qua the impugned bogus/unverified purchased by bringing the GP rate of such bogus purchases at the same rate as that of the other genuine purchases. Accordingly, we set-aside the order of the CIT(Appeals) to the said extent and restore the matter to the file of the A.O to give effect to our aforesaid observations.Appeals of the assessee and revenue are allowed for statistical purposes - ITA No. 62/RPR/2020 ITA No. 74/RPR/2020 - - - Dated:- 22-12-2022 - SHRI RAVISH SOOD , JUDICIAL MEMBER AND SHRI G D PADMAHSHALI , ACCOUNTANT MEMBER Assessee by :Shri G. S Agrawal , CA Revenue by :Shri G. N Singh , Sr. DR ORDER PER RAVISH SOOD , JM : The captioned cross-appeals filed by the assessee and the revenue are directed against the order passed by the CIT(Appeals)-I, Raipur dated 06.03.2020, which in tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , framed by the A.O vide his order passed u/s. 143(3) of the Act, dated 08.08.2016, determining the income of the assessee firm at Rs.4,35,450/-. 4. On the basis of information received by the A.O that the assessee firm as a beneficiary had procured bogus purchase bills, the A.O vide notice issued u/s.148 dated 27.03.2018 reopened its concluded assessment. 5. During the course of the assessment proceedings, it was observed by the A.O that the assessee had, inter alia, claimed to have made purchases aggregating to Rs.2,97,75,000/- from the following 8 parties: S. No. Name of the party from whom claim of the purchase was made Amount of purchase shown by the assessee ( in Rs.) 1. Eaden Rice Mill 17,50,000/- 2. Shri Ganpati Paddy 47,00,000/- 3. Zin Mata Rice Mill 28,87,500/- 4. Shri Veshno Devi Exhim 16,50,000/- 5. Shri Krishna Processor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... da Processor C/o. Sourabh Khendelwal It was stated that the said shop/firm could not be found at the mentioned address. Shri Sourabh Khandelwal had categorically denied of having any relation with the said concerns. 6 7. Shri Veshno Devi Exim Shri Samleshwari Foods C/O. Mohit Vaishnav It was stated that the said shop/firm could not be found at the mentioned address which was residential house of Shri Mohit Vaishnav who was staying on rent. Smt. Kumari Neha Vaishnav relative of Shri Mohit Vaishanv after calling him up on phone had informed that he was not aware about either of the aforesaid concerns. 8. Shri Shyam Trading Company C/o. Raju Gupta It was stated that the said shop could not be found at the mentioned address. Considering the aforesaid facts, the A.O issued summons u/s.131 of the Act to Shri Sanjay Agrawal, partner of the assessee firm and recorded his statement on oath. On being confronted with the fact that all the aforesaid 8 concerns to whom notices u/s.133(6) of the Act were issued at the new addresses t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the A.O that the assessee on being confronted with the statement(s) of the proprietors/partners of the aforementioned concerns that was recorded u/s.131 of the Act, wherein, they had categorically admitted that they had only provided bogus bills and were not involved in carrying out any genuine business, had however, failed to come forth with any plausible explanation much the less controvert the same on the basis of any clinching material. 7. Apart from that, it was observed by the A.O that a perusal of bank statement of some of the concerns, revealed beyond doubt the modus operandi that was adopted by them for providing bogus purchase bills. It was noticed by the A.O that the amount of impugned purchase consideration that was deposited in the bank account through RTGS/cheques was thereafter withdrawn in cash. On the basis of his aforesaid observations, the A.O was of a strong conviction that the amount of purchase consideration that would be paid to the aforesaid tainted suppliers would find its way back to the pocket of the assessee. On the basis of the aforesaid facts, the A.O was of the firm view that the assessee had not made any genuine purchases from the aforement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustification in sustaining the said addition. Accordingly, the CIT(Appeals) partly allowed the assessee s appeal. 10. Both the assessee and the revenue being aggrieved with the order of the CIT(Appeals) have carried the matter in appeal before us. 11. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 12. Although, the assessee had assailed the validity of the jurisdiction that was assumed by the A.O u/s.147 of the Act, however, the Ld. Authorized Representative (for short AR ) of the assessee after arguing for some time sought liberty to withdraw the Grounds of appeal No.(s) 1 3. On the basis of the aforesaid concession of the Ld. AR, the Grounds of appeal No.(s) 1 3 are dismissed as not pressed. 13. Confining ourselves to the adjudication of the Ground of appeal No.2, we shall briefly deal with the facts to the extent the same are relevant to the issue in hand. 14. As is discernible from the orders of the lower authorities, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia 2000 Qtls- Rice Date : 03.07.2013 9 2. Shri Shyam Trading, Gondia 2000 Qtls- Rice Date : 07.10.2013 10 3. Eadan Rice Mill, Raipur 1250 Qtls-Broken rice Date: 08.04.2013 11 4. Maa Sharda Process, Raipur 2000 Qtls- Broken Rice Date : 01.10.2013 13 5. Maa Sharda Process, Raipur 1000 Qtls- Broken Rice Date :01.11.2013 14 6. Shri Krishna Processers, Raipur 1000 Qtls-Broken rice Date: 01.11.2013 14 7. Shri Samleshwari Foods, Abhanpur 750 Qtls- Broken Rice Date :28.11.2013 14 8. Shri Zin Mata Rice Mill, Raipur 750 Qtls- Broken Rice Date : 30.11.2013 14 9. Maa Sharda Process, Raipur 1000 Qtls-Broken Rice Date :05.12.2013 14 10. Shri Zin M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchases and sales have duly been recorded by the assessee, therefore, there was no justification for sustaining the said addition. 17. Be that as it may, it is matter of fact which is evidenced from record that the impugned bogus/unverified purchases of rice/broken rice of the assessee (quantitative vise) had duly been accounted for by the assessee in its books of account, and thus, had found its way in the sales/closing stock for the year under consideration. Considering the aforesaid fact, we are of the considered view that it can safely, or in fact inescapably be concluded that the assesee firm had purchased the goods in question, i.e., rice/broken rice though not from the aforementioned 8 tainted parties, but at a discounted value from the open/grey market. In fact, we are of the considered view that services of the aforesaid 8 tainted parties who are admittedly only in the business of providing bogus/accommodation bills were availed by the assessee firm for the limited purpose of facilitating routing of the impugned purchases through its books of account. We, thus, on the basis of our aforesaid observations, are of the considered view, that now when purchases of the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sale declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trade. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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