Case Law Details
Pratibha Pipes & Structurals Ltd Vs DCIT (ITAT Mumbai)
In this case, on perusal of facts available on record, we find that the AO has not made addition only on the basis of report of sales-tax department. In fact, the AO has conducted all possible enquiries during the course of assessment proceedings, as per which, he had directed the assessee to file confirmations from the parties and also to produce the parties for examination. But, the assessee could neither file confirmations, nor produce the parties in person. Further, the AO has brought out number of discrepancies in books of account of the assessee including purchases from 22 parties, as per which, the assessee has followed SOPs in respect of all purchases, where each identification has been made including entry of goods, whereas in respect of purchases from 22 parties, no such identification has been made. This fact has been admitted by the assessee and its directors. Therefore, we are of the considered view that under these facts, the ratio laid down by the Hon’ble Supreme Court in the case of NK Proteins Ltd vs DCIT (2017) 292 CTR 354 (SC) is squarely applicable to the facts of assessee case, where the Hon’ble Supreme Court dismissed appeal filed by the assessee and confirmed the findings of Hon’ble Gujarat High Court in respect of bogus purchases, where the Hon’ble Gujarat High Court, after analysing necessary facts at para 6 of the order, held that once the Tribunal having come to a categorical finding that the purchases from certain parties are bogus, it was not incumbent on it to restrict the disallowance to the extent of 25% of such purchases. The relevant findings of the Court are as under:-
“6. The Tribunal in the case of Vijay Proteins Ltd. (supra) has observed that it would be just and proper to direct the Assessing Officer to restrict the addition in respect of the undisclosed income relating to the purchases to 25% of the total purchases. The said decision was confirmed by this Court as well. On consideration of the matter, we find that the facts of the present case are identical to those of M/s. Indian Woollen Carpet Factory (supra) or Vijay Proteins Ltd. (supra) In the present case the Tribunal has categorically observed that the assessee had shown bogus purchases amounting to Rs. 2,92,93,2887- and taxing only 25% of these bogus claim goes against the principles of Sections 68 and 69C of the Income Tax Act. The entire purchases shown on the basis of fictitious invoices have been debited in the trading account since the transaction has been found to be bogus. The Tribunal having once come to a categorical finding that the amount of Rs. 2,92,93,2887- represented alleged purchases from bogus suppliers it was not incumbent on it to restrict the disallowance to only Rs. 73,23,3227-.
6.1 In the case of NR Paper & Boards Ltd. (supra), this Court has discussed the issue as to whether after making of block assessment, regular assessment is barred or prohibited by law. This court has held that there would be no overlapping in the nature of assessment made under this Chapter of undisclosed income and the regular assessment made u/s 143(3). However, if the said decision is read in context of questions raised in the present appeal, it cannot be read as having held that even if the material found during the course of search expose the falsity of the entries made in the regular books of accounts, the consequent concealed income cannot be assessed as undisclosed income in the block assessment under Chapter XIV-B. The said decision shall therefore not be applicable on the facts and circumstances of the present case. The Tribunal is justified in holding the same against the assessee and in favour of revenue.”
In this view of the matter and respectfully following the ratio laid down by Hon’ble Supreme Court in the case of N K Proteins Ltd(Supra), we are of the considered view that the AO was right in making 100% addition towards bogus purchases u/s 69C of the Income-tax Act, 1961. The Ld.CIT(A), after considering relevant facts, has rightly confirmed the findings of Ld.AO. We do not find any error in the order of the Ld.CIT(A) and hence, we are inclined to uphold the order of the Ld.CIT(A) and dismiss the appeal filed by the assessee.
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