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TMI Blog2023 (5) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases was found during such search. 2. That the Ld. CIT(A) has erred both in law and on facts for sustaining an addition of Rs. 1,61,84,376/- being 12.5% of alleged bogus purchases of Rs. 12,94,34,506/- (wrongly taken as Rs. 12,94,75,010/- by CIT(A) because no incriminating material concerning such addition was found during the course of search and further no assessment for such year was pending on the date of search. 3. That without prejudice to Ground No. 1 & 2 above, the addition out of alleged bogus purchases as sustained/confirmed by the Ld. CIT(A) is very excessive. 4. That the levy of interest u/s 234A and 234B is illegal and at any rate, without prejudice, the interest as charged is very excessive." ITA No. 7580/Del/2018 "1. That there was no justification on the part of Ld. CIT(A) for sustaining/confirming an addition of Rs. 36,84,376/- being 12.5% of alleged bogus purchases of Rs. 2,94,75,010/-. 2. That without prejudice to Ground No. 1 above, the addition out of alleged bogus purchases as sustained/confirmed by the Ld. CIT(A) is very excessive. 3. That the levy of interest u/s 234A ad 234B is illegal and at any rate, without prejudice, the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 7. Arihant 745.68 Total 1294.34 294.75 0.56 745.79 5.1. Accordingly, the Ld. AO held that the assessee had made bogus purchases and added Rs. 12,94,34,506/-; Rs. 2,94,75,010/-; Rs. 56,421/- and Rs. 7,45,78,816/- in AY 2010-11, 2011-12, 2013-14 and 2014-15 respectively recording the following common findings in para 5 of the assessment order: "5. In view of the above discussion, it is evident that the assessee has not been able to establish the genuineness of transaction with these parties either during post, search inquiries or assessment proceedings. These parties have been found to non-existent a. their known addresses both during post-search inquiries and assessment proceedings. Nonexistence at their business premises makes ,t c that these parties were not capable o, entering in to transactions with the assesses Further, even the assessee has not been able to produce them so as to establish their capability of supplying goods/ senses to the assessee. It is reemphasized payment through banking channels cannot make a nongenuine transaction genuine Thus, it is held that the transaction with the parties (as tabularized bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need not, always, to be positive. Even, negative findings in certain cases would constitute, "incriminating material". The non-genuineness of these parties were indicated during the search by not finding bills/vouchers of these parties. The post enquiries about genuineness of these parties certainly emanates from the circumstances which were noted as a result of the search & seizure action." 6.4 It may not be out of place to mention that the assessee sought to introduce additional evidence in the form of copies of certain purchase bills/invoices from the parties. After obtaining comments of the Ld. AO and hearing the AR of the assessee, the Ld. CIT(A) declined to admit them by observing that the above documents were certainly available with the assessee during assessment stage. Apparently, there was no difficulty in producing them. The assessee did not support its argument of being prevented by 'sufficient cause'. 7. Coming to the merits of the impugned additions in all the years, the Ld. CIT(A) summarised the main contention of the assessee in para 6.2 of the appellate order. Relying on the principles of law enunciated by the Hon'ble Supreme Court in State Bank of India vs. S.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt observed : "Justice means justice between the parties. The interest of justice equally demand that the guilty should be punished and that technicalities and irregularities which do not occasion failure of justice are not allowed to defeat the ends of justice. Principles of natural justice are but the means to achieve the end of justice. They cannot be perverted to achieve from opposite end." 6.22 In Bholanath Polyfab Pvt. Ltd. 355 ITR 290 (Guj), the facts of the case were that the assessee was engaged m the business of trading m finished fabrics. For the AY 2005-06, The Assessing Officer held that the purchases worth Rs. 40,69,546/- were unexplained. He, therefore, disallowed such expenditure claimed by the assessee and computed the total income of Rs.41,10,187/-. The issue was carried in appeal by the assessee before the Ld. CIT(A) who rejected the appeal, upon which the assessee went in further appeal before the Hon'ble Tribunal. Tire Hon'ble Tribunal substantially allowed the assessee's appeal. In so far as the question of bogus purchase is concerned, the Hon'ble Tribunal concurred with the Revenue's views that such purchases were made from bogus pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be subject to tax. This was the view of this Court in the case of Sanjay Oilcake Industries vs. CIT (2009) 316 ITR 274 (Guj.). Such decision is also followed by this Court in a judgment dated August 16, 2011, in Tax Appeal No. 679 of 2010 in the case of CIT vs. Kishor Amrudlal Patel. In the result, tax appeal is dismissed". 6.24 The facts in the present case are similar to the facts in the above mentioned case. In the present case, the AO has shown that the party in question was non-genuine. The appellant has not been able to disprove the findings of the AO regarding the non-genuineness of the parties. However, AO after examining the evidences did not give any adverse finding that tire appellant had not shown consumption/sales of the goods and that it had not offered the income on such sale of goods. Proper weight is required to be given to the arguments of the AR mentioned in para 6.2, above. It is certain that there are evidences to indicate that receipt/consumption of material cannot be doubted. This is also a fact that the AO has not found any fault with the books of accounts which are audited. It is also an important fact that GP ratio of this assessment year works o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove that the cross cheques had not been given to parties from whom supplies were allegedly procured but these were encashed from a bank account in the name of another entity, possibly hawala dealer. Subsequently, the money deposited in that account was withdrawn in cash almost on the same day. The Tribunal however, held that if the purchases were made from open market without insisting for genuine bills, the suppliers may be willing to sell the product at a much less rate as compared to a rate which they may charge in which the dealer has to give genuine sale invoice in respect of that sale. Keeping all such factors in mind, the Tribunal estimated an element of profit percentage of the overall purchase price accounted for in the books of accounts through fictitious invoices. 6.27 As narrated earlier, the A.O. in this case has held that the parties from whom the purchases were made by the appellant were found to be non-genuine. Although, the AO has not dealt with the case of getting Job-work done from M/s Amit Builder as that of Job-work but clubbed it with the cases of purchases from non-genuine parties, however, that does not make material difference. Crux of the matter remains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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