TMI Blog2023 (11) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... . D.R. is clearly distinguishable. Thus no hesitation in confirming the order passed by the Ld. CIT(A). Decided against revenue. - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Revenue : Shri Ashish Kumar Pandey, Sr. D.R. For the Assessee : Shri Mehul Ranpura, A.R. ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These two appeals are filed by the Revenue as against the two separate appellate orders both dated 31.05.2022 passed by the Commissioner of Income Tax (Appeals-11, Ahmedabad arising out of the reassessment order passed under section 143 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Years 2014-15 2015-16. Since identical issue of bogus purchase is involved in both cases, the same are disposed of by this common order. 2. The brief facts of the case is that the assessee is a Private Limited Company engaged in manufacturing of all type of Craft Papers. For the Assessment Year 2014-15, the assessee filed its Return of Income declaring total income of Rs. 1,90,633/-. The same was processed u/s. 143(1) of the Act on 24.07.2015 accepting the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me industry, where the actual purchase of goods is made from grey market and subsequently, to justify such purchase, the purchaser obtains purchase bills from the parties engaged in accommodation entries i.e. M/s. Chouhan Supplier. In view of these facts and also the discrepancies mentioned by the AO in the Assessment order, it is established that purchase from M/s. Chouhan Supplier was not genuine. 8.8 Therefore, the important question is that, if the appellant had actually purchased the raw material (wastepaper) from a source other than the impugned vendor M/s. Chouhan Supplier, then there should be some benefit arising to the appellant. The purchase of wastepaper is imperative to the appellant. Here the appellant might have resorted to Un-registered dealer (URD) purchases and obtained bills from registered purchasers. In that case, the benefit to the appellant is the non-payment of VAT on such purchases, which is 5% on such purchase plus some other benefits. 8.9 Reliance is placed on Hon'ble Jurisdictional High Court of Gujarat judgment in the case of PCIT Vs Sandeep Kumar Chandak in Tax Appeal No. 210 of 2020, wherein the identical issue has been dealt with and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be fair and reasonable under the facts and circumstances of the case. Therefore, for the above purposes we estimate Rs. 50,000 and accordingly the order of the CIT(A) is modified and the addition to the extent of Rs. 50,000 is sustained and balance addition of Rs. 26,89,407 is deleted out of the total addition made of Rs. 27,39,407. In view of the above, we direct the AO to make the ad-hoc addition on such purchases as discussed above, hence the ground of appeal of the assessee is allowed. 10 Thus, if the Appellate Tribunal in the overall facts of the case and having regard to the materials on record thought fit to make ad hoc addition at the rate of 5% of such purchases, then, the Tribunal could not be said to have committed any serious error warranting any interference in this appeal. 8.11. Accordingly, respectfully following the above stated decision of the Hon'ble Jurisdictional High Court of Gujarat, and particularly looking to the fact that the stock as on the date of verification by Excise Department was tallied, it is concluded that the appellant might have purchased the raw-material from any other sources and not from M/s. Chouhan Supplier. Under such circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncelled by Authorities. Thus the case is squarely covered by the decision of the Hon ble Gujarat High Court in the case of N.K. Industries vs. DCIT reported in [2016] 72 taxmann.com 289 and the A.O. was correct in holding the entire bogus purchases as the income of the assessee. 6. Per contra, the Ld. Counsel Shri Mehul Ranpura appearing for the assessee supported the order passed by the Ld. CIT(A) and submitted that the assessee had actually purchased of raw materials (Waste paper) from unregistered dealers from grey market other than the supplier of M/s. Chauhan Supplier. Further the assessee s premises was subjected to search action under Central Excise Act, 1944 on 08.08.2014, the search parties made physical verification of stock including purchases, bills and vouchers and compared the same with the books of account. After verification they have not made any adverse remarks about the stocks. 6.1. Similarly, the Assessing Officer nowhere in the assessment order doubted the production, sales, yield ratio and other financial ratio declared by the assessee and the A.O. has not rejected the book results. It is the above circumstances, Ld. CIT(A) followed Jurisdictional High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 145 of the Income-tax Act, 1961 Method of accounting - Estimation of Profits (Bogus purchases] - Assessment year 2006-07 Assessee was engaged in business of trading in steel on wholesale basis - Tills, held that purchases made from said parties were bogus - He. Assessing Officer having found that some of alleged suppliers of steel to assessee had not supplied steel to assessee but had only provided sale bills, held that purchases made from said parties were bogus. He, accordingly, added entire amount of purchases to gross profit of assessee - Commissioner (Appeals) having found that assessee had indeed made purchases, though not from named parties but other parties from grey market, sustained addition to extent of 30 per cent of purchase cost as probable profit of assessee extent of 12.5 per cent Tribunal however, sustained addition To Whether since purchases were not bogus but were made from parties other than those mentioned in books of account, only profit element embedded in such purchases could be added to assessee's income Held, yes Whether hence, order of Tribunal needed no interference - Held, yes (Paras 6, 7 9 In favour of assessee] (ii) CIT vs. Sathya ..... X X X X Extracts X X X X X X X X Extracts X X X X
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