TMI Blog2023 (11) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed that assessing officer has not doubted the corresponding sales made by the assessee. If such purchases are treated as non-genuine then the corresponding sales should also be considered as non-genuine. Therefore, we consider that in such types of transaction only the profit margin embedded in such transaction could be taxed. In such type of cases the assessee procures the material from the grey market by paying cost and as the bills are not available for such transaction, obtains bills from third party who after receipt of cheque from the assessee making him available the cash after deducting its commission. Since the sales were not doubted therefore it was proved that assessee was actually in possession of goods. The assessee has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer and the Appellate Authority erred in creating and upholding addition alleging bogus purchases solely on the basis of third party statement, i.e, statement recorded by the Proprietor of M/s Akash Steel Traders. d. The Appellant states and submits that, the Assessing Officer and the Appellate Authority erred in creating and upholding addition alleging bogus purchases without providing a cross- examination opportunity and without providing a copy of such third-party statement relied upon by it leading to the violation of principles of natural justice. e. The Appellant states and submits that, the Appellate Authority erred in upholding the additions at 25% ignoring the fact that the sales of the Appellant have not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 173,86,509 Total 1,73,86,509/- During the course of reassessment proceedings the assessing officer has issued various notices and show cause notice, however, the assessee has not made compliance, therefore, the AO has finalised assessment ex-parte u/s 144 r.w.s 147 of the Act. The assessing officer stated that assessee has not made any actual purchases from the aforesaid parties as the said party has only issued bogus bills of purchases as per the information received from the sale tax department. Therefore, the assessee was issued show cause notice dated 23.02.2015 to explain as to why the purchases made from the said party to the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue because of low tax effect as prescribed in the CBDT circular dated 17/2019 and 08.08.2019. 6. During the course of appellate proceedings before us the ld. Counsel filed the affidavit dated 22.09.2023 stating that the ld. CIT(A) Thane had passed the order on 03.08.2020, however, such appeal order was not served on the assessee company. The assessee company was shut down due to lockdown restriction as well as closer of business due to covid period. Thereafter on 14.03.2023 the Assistant Commissioner of Income Tax, Panvel Circle sent a notice u/s 158AB of the Act on the whatsapp number of the director of the company and at that stage he has come to know about the said order passed by the ld. CIT(A)-2 Thane. Only at this stage the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the material on record. Without reiterating the facts as elaborated above the assessing officer has added the 100% purchases made by the assessee from aforesaid party on the basis of information received from the sale tax department. The ld. CIT(A) has restricted the addition to the extent of 25% of the bogus purchases. The revenue has filed appeal before the ITAT Pune which was dismissed because of low tax effect. The assessee submitted that it has not received any notices because of shut down of the business and also submitted that even it has not received form no. 36 filed by the department before the ITAT. The revenue has not brought any contrary evidences against the claim of the assessee that neither it had received the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh after deducting its commission. Since the sales were not doubted therefore it was proved that assessee was actually in possession of goods. The assessee has been benefitted by receiving margin of grey market. The gross profit for the F.Y. 2009-10 to 2011-12 as provided in the order of ld. CIT(A) in the case of the assessee is reproduced as under: Ratio FY 2009-10 FY 2010-11 FY 2011-12 Gross Profit 0.95% 1.68% 1.88% Net Profit 0.22% 0.31% 0.34% After taking into consideration the aforesaid facts we consider that the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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