POKHRAJ P. DOSHI Vs. INCOME TAX OFFICER
LAWS(IT)-2014-12-10
INCOME TAX APPELLATE TRIBUNAL
Decided on December 26,2014

Appellant
VERSUS
Respondents

JUDGEMENT

G.C.GUPTA,VP. - (1.) THESE cross appeals by the assessee and the department for the assessment year 2005 -2006 and 2006 -2007 are directed against the orders of the CIT(A). These are being disposed of with this consolidated order.
(2.) THE grounds of the appeal of the assessee in ITA No.3147/Ahd/2008 for A.Y.2005 -2006 are as under: Rs.1. The ld. ITO has erred in law and on the facts of the appellant's case in assessing the total income of the appellant at Rs.13,88,168/ - instead of Rs.1,96,710/ - returned by the appellant. 2. The ld. ITO has erred in law and on the facts of the appellant's case in making addition of Rs.11,91,458/ - on the erroneous plea that purchases made by the appellant from M/s.R.R.Patel trading corporation is bogus." The grounds of the appeal of the assessee in ITA No.3273/Ahd/2009 for A.Y.2006 -2007 are as under: Rs.1. The ld. ITO has erred in law and on the facts of the appellant's case in assessing the total income of the appellant at Rs.14,72,340/ - instead of Rs.4,88,760/ - returned by the appellant. 2. The ld. ITO has erred in law and on the facts of the appellant's case in making addition on the erroneous plea that purchases made by the appellant from M/s.R.R. Patel trading corporation is bogus. 3. The ld. ITO has erred in law and on the facts of the appellant's case in making addition of Rs.2,95,074/ - on the erroneous plea on alleged bogus purchases has earned such income." The grounds of the appeal of the Revenue in ITA No.3248/Ahd/2008 for A.Y.2005 -2006 are as under: "1. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition on account of bogus purchases and payment of Rs.27,80,068/ - 2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in not appreciating the fact that the assessee had failed to prove the genuineness of the purchases made from Shri Ravish R. Patel, Prop. Of R.R. Patel Trading Corporation and also failed to prove the nexus of payment during the year under consideration. 3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition on disallowance of expenses of M/s.Kamal Steel and Eng. Of Rs.2,42,402/ -" The grounds of the appeal of the Revenue in ITA No.3406/Ahd/2009 for A.Y.2006 -2007 are as under: "1. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition on account of bogus purchases and payment of Rs.6,88,506/ - 2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in not appreciating the fact that the assessee had failed to prove the genuineness of the purchases made from Shri Ravish R. Patel, Prop. of R.R. Patel Trading Corporation and also failed to prove the nexus of payment during the year under consideration."
(3.) THE learned counsel for the assessee submitted that the only issue in all these four cross -appeals by the assessee and the Revenue is with regard to the addition made by holding the goods purchased from certain parties as bogus and the entire purchase amount of goods was added as income in the hands of the assessee. She submitted that the CIT(A) has reduced the addition by sustaining the addition at 25 percent of the purchase amount booked in the names of all these parties. She submitted that the assessee is in appeal against the high rate of 25 percent applied by the CIT(A) and the Revenue is in appeal against the reduction of the purchase amount from these parties to the extent of 75 percent. She submitted that there was complete quantitative tally and the goods purchased from these parties were delivered to the reputed parties by the assessee. She submitted that the AO has not denied that these sales were indeed made and booked. She submitted that the assessee has submitted a number of reasons for deleting the entire addition before the CIT(A) as were recorded by the CIT(A) in the appellate order. She submitted that there was identical issue in the cross appeals of M/s.American Steel Pvt. Ltd. Vs. ITO, in ITA No.2848/Ahd/2008 and 2720/Ahd/2009 and ITA No.3098/Ahd/2008 and 2973/Ahd/2009 for the same assessment years 2005 -2006 and 2006 -2007, wherein the so -called bogus purchases were made from the same party viz. M/s.R.R. Patel Trading Corporation ("RRP" for short) and the Tribunal has restricted the addition to the extent of 20 percent of the total purchases made from "RRP" as income in the hands of the assessee and the grounds of the appeal of the assessee were partly allowed and that of the Revenue were dismissed. The learned DR has opposed the submissions of the learned counsel for the assessee. He has filed written submissions dated 8.8.2012 before the Tribunal in support of the case of the Revenue. He submitted that the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Hynoup Food & Oil the Hon'ble Gujarat High Court has held that the applicability of provisions of section 40A(3) of the Act was applicable to the case of bogus purchases as the genuineness of the payment and identity of the payee were the first and foremost requirement of law, which could not be proved by the assessee. He submitted that once the purchase made from a particular party is not proved, the entire purchase amount has to be added as income of the assessee.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.