TMI Blog2023 (6) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... dition in the hands of the assessee as regards the bogus/unproved purchases is to be made to the extent of bringing the G.P rate of such bogus purchases at the same rate of other genuine purchases. Thus addition in the case of the assessee is liable to be restricted only to the extent of the profit which he would have made at a discounted value from the open/grey market as against the value at which the same had been booked by the assessee in its books of accounts, and the quantification of the same shall be done by the A.O in terms of the aforesaid observations. - ITA No. 50/RPR/2021 - - - Dated:- 23-11-2022 - SHRI RAVISH SOOD, JUDICIAL MEMBER For the Assessee : Shri Bikram Jain, CA For the Revenue : Shri G.N Singh, 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 01.04.2021, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s. 148 of the Income-tax Act, 1961 (in short the Act ) dated 11.12.2017 for the assessment year 2010-11. The assessee has assailed the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in question, which the assessee failed to do by placing on record the requisite documentary evidence. It was observed by the A.O that the assessee s claim of having made payments towards purchase consideration to the aforementioned party, viz. M/s. Tirupati Traders, Raipur was not borne from the records, as the same revealed only a payment of Rs. 40,000/- during the year under consideration. As the assessee had failed to substantiate the authenticity of the purchase transactions in question, therefore, the A.O holding the books of account of the assessee as not reliable held the purchases in question as bogus. The A.O holding a conviction that the assessee had made the impugned purchases of Rs. 7,15,594/- outside his regular books of accounts, thus, made an addition of the said amount to his returned income. Also, the A.O being of the view that the sales corresponding to the aforesaid unaccounted purchases would also have remain unrecorded, thus, by applying GP rate of 15% made a further addition of Rs. 1,07,339/- towards the unaccounted profit which the assessee would have made on such unrecorded sales. Accordingly, the A.O vide his order passed u/s. 143(3) r.w.s. 148, dated 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,10,000/- Also, the ld. A.R had taken us through Page 23-24 of APB, which revealed that the balance amount of purchase consideration of Rs. 4,05,594/- was paid by the assessee in the immediately succeeding year i.e. F.Y. 2010-11. On the basis of the aforesaid facts, the observation of the A.O that the assessee had only made a payment of Rs. 40,000/- against its purchases in question of Rs. 7,15,594/- is found to be factually incorrect. 10. Admittedly, it is a matter of fact borne from record that the assessee had failed to substantiate the authenticity of the purchases which were claimed to have been made from the aforementioned party, viz. M/s. Tirupati Traders, Raipur. Although, I am of the conscious of the fact that now when the transaction with M/s. Tirupati Traders, Raipur, a black listed party, had come under cloud of doubt, therefore, a very heavy onus was cast upon the assessee to substantiate the authenticity of the purchases which were claimed to have been made from the said party by placing on record supporting documentary evidence, which I find it had failed to do so. Although, the notice issued by the A.O u/s. 133(6) of the Act to the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct incontending that 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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