TMI Blog2023 (4) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... r And Shri G D Padmahshali, Accountant Member For the Assessee : None For the Revenue : Shri Piyush Tripathi, Sr. DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 18.08.2021, which in turn arises from the order passed by the A.O under Sec.143(3) of the Incometax Act, 1961 (in short the Act ) dated 20.12.2018 for the assessment year 2016-17. The assessee has assailed the impugned order on the following grounds of appeal before us: 1. That there is no jurisdiction either in law or on facts with the Ld. CIT(A) to sustain the addition of 48,16,049/- on ground of alleged bogus purchase made from four parties, as same has already been fully and sufficiently disclosed by the Appellant under the Income disclosure scheme 2016 and thereon even paid tax on such undisclosed income ; 2. That the CIT(A) was not justified in upholding the rejection of declaration made by the Appellant under income disclosure scheme 2016, wherein the Appellant had categorically declared the undisclosed income in form of allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above grounds of appeal. 2. At the very outset, we find that the captioned appeal filed by the assesee involves a delay of 39 days. The assessee has filed an application dated 19.11.2021 seeking condonation of the delay of 39 days. It is stated in the application that as during the relevant period the authorized signatory of the assessee appellant firm was out of station and thereafter, due to Dussehra and Diwali festival the present appeal could not be filed within the stipulated time period. It is also submitted by the assessee that the failure to file the present appeal within stipulated time period was also due to the on-going Covid-19 pandemic and the circumstances arising on account of the same. It is further submitted by the assessee that the Hon ble Supreme Court on March 08, 2021 vide its suo-motto order had initially excluded the period from March 15, 2020 till March 14, 2021 for calculating the period of limitation. It is further submitted that the Hon ble Supreme Court had thereafter vide its order dated April,27, 2021 restored its earlier order dated March 08, 2021, and it was provided that the period of limitation w.e.f. March 15, 2020 would stand extended till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the A.O that a survey operation u/s.133A of the Act was conducted at the business premises of Shri Sanjay Sharma, Hanuman market, Raipur and Shri Kamlesh Kesharwani, commission Agent, Ramsagarpara, Raipur on 15.03.2016, which revealed that certain rice millers would procure bogus bills from brokers/entry operators without any actual purchase of goods. It was observed by the A.O that substantial incriminating material evidencing the aforesaid facts were found in the course of the aforesaid proceedings. The A.O also noticed that survey action was carried out in the case of Nagarik Sahakari Bank, Raipur where some of the brokers/entry operators maintained their bank accounts. It was further observed by the A.O that brokers/entry operators had in their respective statements that were recorded on oath u/s.131 of the Act had admitted of having provided bogus bills to rice traders and millers without any actual supply of goods. Also, it was noticed by the A.O that certain rice millers had in their statements that were recorded on oath admitted of being involved in the nefarious activities of providing bogus bills without any corresponding sales of goods. After deliberating at length o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had purchased the goods in question not from the aforementioned tainted parties from whom only bills were procured for routing the same through its books of account, but had procured such goods at a discounted value from the open/grey market, thus, disallowed 25% of the value of bogus purchases and made a consequential addition of Rs.74,46,875/-( being 25% of Rs.2,97,87,500/-) to the assessee s returned income. Observing that as the assessee had declared a sum of Rs.26,30,826/- being 8.83% of the amount of bogus purchases in the IDS, 2016 declaration, therefore, the A.O taking a just and reasonable view allowed the credit of the aforesaid amount of Rs.26,30,826/-. Accordingly, the A.O vide his order passed u/s.143(3), dated 20.12.2018 after making an addition of Rs.48,16,049/- [Rs.74,46,875/-(-) Rs.26,30,826/-] determined the income of the assessee company at Rs.84,85,639/-. 10. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). Observing that the addition made by the A.O @25% of the value of the impugned purchases was justified, the CIT(Appeals) confirmed the disallowance made by the A.O of Rs.48,16,049/-(net). 11. The assessee being aggri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of bogus bills in its books of accounts. 15. As we have upheld the view taken by the lower authorities that the assessee company had not made any genuine purchases from the aforementioned 4 parties in question, therefore, we shall now deal with the quantification of the profit which it would have made by procuring the goods in question at a discounted value from the open/grey market, i.e. as against the inflated value at which the same had been booked on the basis of bogus bills in its books of account. 16. On a careful perusal of the order of the A.O, we find that he had not given any cogent reason for working out the disallowance @25% of the value of the impugned bogus/unsubstantiated purchases. In fact, the only reason which can be gathered from a perusal of the assessment order is the reliance placed by the A.O on the order of the Hon ble High Court of Gujarat in the case of Sanjay Oil Cake Industries Vs. CIT (supra.). Also, we are not impressed with the manner in which the CIT(Appeals) had confirmed the disallowance made by the A.O. As the very basis adopted by the lower authorities in making/sustaining the addition in the hands of the assessee company is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming 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 profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66% Therefore, considering 5.66 % of Rs.3,70,78,125/- which comes to Rs.20,98,62 1.88 we t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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