Ravi Kedia Vs ITO (ITAT Raipur)
Accordingly, on the basis of my aforesaid observations the matter is restored to the file of the A.O.
ITAT Raipur held that addition in case of bogus purchase transaction restricted to the extent of the difference between the gross profit of genuine purchases transactions and gross profit of bogus purchases transactions.
Facts- On the basis of information that had surfaced in the course of survey action u/s. 133A of the Act conducted at the business premises of five rice millers a/w. two brokers on 15.03.2016, it was gathered by the A.O that the assessee as a beneficiary had procured bogus purchase bills of a value of Rs.30,12,000/- during the year under consideration from two parties.
Assessee submitted that he had already surrendered 10% of the purchases under the IDS, 2016. It was observed by the A.O that the disclosure made by the assessee under IDS, 2016 on account of bogus purchases in itself established that he had not made genuine purchases from the aforementioned parties. Apart from that, it was observed by the A.O that the disclosure of Rs.2,73,200/- that was made by the assessee worked out at 9% (approx.) of the total amount of bogus billing of Rs.30.12 lac. A.O after deliberating at length on the modus-oparandi that was adopted by the rice millers/brokers for procuring bogus purchase bills etc., concluded that the assessee had not made any genuine purchases from the parties in question.
Accordingly, A.O disallowed 25% of the value of bogus purchases and made a consequential addition of Rs.7,53,000/-. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success.
Conclusion- Held that would be worked out by the A.O as regards the profit which the assessee would have made by procuring the goods in question at a discounted value from the open/grey market, as against the value booked in his books of accounts, i.e by restricting the addition to the extent of the difference between the gross profit of genuine purchases transactions and gross profit of bogus purchases transactions would be reduced on a pro-rata basis, i.e to the extent such gross profit is attributable to bogus/unverified purchase transactions vis-à-vis total purchases made during the year.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 09.03.2023, which in turn arises from the order passed by the A.O. under Sec. 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short ‘the Act’) dated 16.12.2019 for the assessment year 2012-13. The assessee has assailed the impugned order on the following grounds of appeal:
“1. That CIT Appeals-NFAC has erred in both fact and in law in confirming the disallowance made by the Assessing Officer of 25% of the total purchases from certain parties of Rs.4,79,800/- u/s. 145(3) of the Income Tax Act, 1961.
2. That CIT Appeals NFAC while confirming the addition has failed to consider the fact that the A.O has made the addition to the income which was already declared by the Appellant in Income Disclosure Scheme, 2016.
3. That the assessee craves to add, amend or delete any of the above grounds of appeal during the course of hearing.
4. The above grounds are without prejudice to each other.”
2. Succinctly stated, on the basis of information that had surfaced in the course of survey action u/s. 133A of the Act conducted at the business premises of five rice millers a/w. two brokers on 15.03.2016, it was gathered by the A.O that the assessee as a beneficiary had procured bogus purchase bills of a value of Rs.30,12,000/- during the year under consideration from two parties. Acting upon the aforesaid information, the A.O reopened the case of the assessee u/s. 147 of the Act. Notice u/s.148 of the Act dated 30.09.2019 was issued to the assessee. In compliance, the assessee filed his return of income declaring an income of Rs.4,46,500/-.
3. During the course of assessment proceedings, it was observed by the A.O that the assessee had claimed to have made purchases of Rs.30,12,000/- from the following two tainted parties:
