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TMI Blog2024 (12) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld. CIT(A) reducing the disallowance of bogus purchase from Rs. 1,05,43,183/- to Rs. 7,90,739/-? (B) Whether the Appellate Tribunal was justified in inferring the purchase of waste paper from grey market when supporting evidence in this regard was not produced before him? (C) Whether the Appellate Tribunal was justified in confirming the order passed by Ld. CIT(A) reducing the addition made on account of bogus purchase when there was finding by the Gujarat Commercial Tax department that sales of M/s. Chauhan Supplier are bogus and its TIN was cancelled ab-initio ? Tax Appeal No. 270 of 2024 (A) Whether on the facts of the case as well as in law, the Income Tax Appellate Tribunal was justified in confirming the order passed by Ld. CIT(A) reducing the disallowance of bogus purchase from Rs. 2,29,21,710 to Rs. 17,19,128/- ? (B) Whether the Appellate Tribunal was justified in inferring the purchase of waste paper from grey market when supporting evidence in this regard was not produced before him? (C) Whether the Appellate Tribunal was justified in confirming the order passed by Ld. CIT(A) reducing the addition made on account of bogus purchase when there was findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration i.e. Α.Υ. 2014-15 of Rs. 1,05,43,183/-, whose tax registration (TIN) has been cancelled ab initio. This fact is verifiable from the Panchnama and statement of the director recorded by the VAT Department in spot enquiry and the same is submitted by the appellant during the course of appellate proceedings. 8.3 From the above, it is clear that, the VAT Department did not find anything incriminating from the premises of the appellant. In fact, statement of the director recorded by the VAT authorities in presence of Panchas clearly reveals that the officers of VAT Department have verified the financial records, statutory returns and physical cash balance etc. and they did not find any issue in that matter. 8.4 I also find that another vital fact addressed by the appellant is that the appellant company had made purchase of waste papers from M/s. Chouhan Suppliers during the month of March, 2014. The appellant's premises was subjected to search action under Central Excise Act, 1944 on 08/08/2014, and during the search, officers of the Excise Department had made physical verification of stock including purchases, bills and vouchers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Therefore, considering the appellant's GP of 9.52% and NP of 2.09% and also probable saving in the cost of purchase by avoiding burden of VAT of 5% and some other savings and discrepancies noticed by the AO in the assessment order, It is reasonable to estimate the probable benefit derived by the appellant at 7.5% of the total purchase made from M/s Chouhan Suppliers, which works out to Rs 7,90,739/- Hence, the addition is restricted to the tune of Rs. 7,90,739/- and thus, the AO is directed to delete the balance amount of addition of Rs. 97,52,444/-. Thus, the grounds of appeal No.3 and 4 are partly allowed". 5. Being aggrieved, the appellant-revenue preferred an appeal before the Tribunal. The Tribunal considering the facts of the case and the submissions made by both the parties upheld the order passed by the CIT (Appeals) by observing as under:- "7. We have given our thoughtful consideration and perused the materials available on record. The Commercial Tax (VAT) Department had carried out spot inspection at the business premises of the assessee on 04.04.2016 wherein nothing abnormal was found except the fact, the supplier M/s. Chauhan Supplier had not deposited VAT col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see under Section 68 of the Act. It was further submitted that on the basis of the information made available from DGCEI, the case of the respondent-assessee was reopened on the ground that to prove the purchases, the respondent-assessee failed to produce the relevant documents to show that the purchases made from M/s. Chauhan Suppliers was genuine purchase and assessee did not produce the purchase invoices, contra ledger/confirmation from the supplier, Inward Register kept at business premises, Transport/Lorry receipt etc. It was therefore, submitted that the assessee has rightly disallowed the entire purchases made by the respondent-assessee being bogus purchases. It was therefore submitted that the CIT (Appeals) and Tribunal have arrived at perverse findings of the fact contrary to the records. 7.1 It was further submitted that inspite of the fact being proved that the respondent-assessee made bogus purchases, the entire purchases ought to have been disallowed and no profit element embedded in sales which was disclosed by the assessee and therefore, the CIT (Appeals) and the Tribunal were not justified in confirming the purchase of raw material made by the assessee from grey ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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