Ashoka Buildcon Limited Vs ACIT (ITAT Pune)
It is observed that the assessee allegedly purchased raw materials through the Hawala purchase bills and thereafter consumed the same in the power project In such a situation, it cannot be said that the entire amount of hawala purchase bills requires addition. The Hon‟ble jurisdictional High Court in Pr.CIT Vs. Paramshakti Distributors Pvt. Ltd., vide its judgment dated 15.07.2019 in ITA No.413/2017, has sustained the addition @ 10% of the amount of purchases, being, the profit element involved therein. The relevant extracts of the Hon‟ble High Court‟s decision reads as follows:
“2. The first question pertains to restricting the addition of Rs.23.16 Lakhs to Rs.2,21,600/- by the Tribunal. The Assessing Officer had made the said addition on the ground that the assessee’s purchases were found to be bogus. The entire purchase amount was therefore, added to the assessee’s income. The Tribunal, however, restricted to the said sum of Rs.2,21,600/-. The Tribunal recorded that the Assessing Officer has not rejected either the purchases or the sales made out of the said purchases. The Tribunal therefore, was of the opinion that the addition should be restricted to 10% of the total purchases. The Revenue strongly disputes this proposition.
3. Without elaboration, what the Tribunal by the impugned Judgment held is that the Department had not rejected the instance of the purchases since the sales out of purchase of such raw material was accounted for and accepted. With above position, the Tribunal applied the principle of taxing the profit embedded in such purchases covered by the bogus bills, instead of disallowing the entire expenditure. We do not find any error in the view of the Tribunal. No question of law arises.”
In view of the decision of the Hon‟ble Jurisdictional High Court, we are of the considered view that it would be reasonable to sustain addition @ 10% of the amount of bogus purchases, being profit element involved therein. Thus, grounds of appeal raised by the assessee are partly allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
These cross-appeals preferred by the assessee and Revenue emanates from the common order of the Ld. CIT(Appeals)-12, Pune dated 02.02.2017 for the assessment year 2011-12 as per the grounds of appeal on record.
2. The assessee in ITA No.1088/PUN/2017 has raised following grounds of appeal:
“In view of the facts of the case, evidences on record, submissions made and the provisions of law-
1. The learned CIT(A) erred in holding the initiation of proceedings u/s.147 and thereby issue notice u/s.148, for the reasons recorded by the AO as valid in law. Therefore, it is prayed to hold the initiation of proceedings u/s.147 as bad in law and thereby annul the assessment order passed u/s.143(3) w.s.147.
2. The learned CIT(A) erred in disallowing purchases to the extent of 51,85,086/-, being 25% of the purchases made from following parties, disregarding the explanations furnished and the evidences brought on record by the appellant :
