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TMI Blog2023 (11) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... eating and upholding addition alleging bogus purchases solely based on the investigation of third party investigating agency (Sales Tax Department) and without making any further inquiries to substantiate such additions. b. The Appellant states and submits that, the Assessing Officer and the Appellate Authority erred in ignoring the fact that the Appellant had already paid MVAT to the Sales Tax Department on the impugned transactions and erred in not reducing the said amount from the additions. c. The Appellant states and submits that, the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Fact in brief is that return of income declaring total income of Rs. 8,07,850/- was filed on 30.09.2011. The case of the assessee was reopened by issuing of notice u/s 148 of the Act on 10.05.2013 on the basis of information received from the Sale Tax Department that assessee had obtained bills of bogus purchases from the following parties: Sr. No. Name MVAT No. Amount 1. Akash Steel Traders 27230363523V 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases. Accordingly, disallowance to the extent of Rs. 43,46,627/- was confirmed and balance amount of Rs. 130,39,882/- was deleted. 5. The revenue has filed appeal against the order of CIT(A) before the ITAT Pune. The ITAT Pune vide ITA No. 05/Pune/2021 for A.Y. 2011-12 dated 28.06.2022 dismissed the appeal of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular gross profit shown by the assessee in the past years no addition should have been made in the case of the assessee. On the other hand, the ld. D.R submitted that assessee has failed to make any compliance before the assessing officer and he supported the lower authorities. 7. Heard both the sides and perused 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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