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TAXAP/1385/2009 4/ 4 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1385 of 2009
=========================================================
I
T O WARD 5(3) BARODA - Appellant(s)
Versus
MANOHAR
METAL CORPORATION - Opponent(s)
=========================================================
Appearance
:
MR
KM PARIKH for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 01/03/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
Revenue
is in appeal against the judgment dated 20th October 2008
passed by the ITAT raising following questions of law:
“Whether
on the facts and in the circumstances of the case, the Appellate
Tribunal was right in law in confirming the addition of 25% of bogus
purchases purported to have been made from non-existent parties?”
Alternatively
“Whether
on the facts and in the circumstances of the case, the Appellate
Tribunal was right in law in modifying order of the CIT(A) and
issuing direction to the A.O. To consider disallowance of 25% on
such bogus purchases in spite of holding that purchases in question
shown in the books of accounts are bogus?”
Certain
purchases stated to have been made by the assessee were doubted by
the Assessing Officer. Though sufficient opportunity was given,
assessee failed to establish the genuineness of such purchases, did
not produce further proof and could not bring parties before the
Assessing Officer. Assessing Officer, therefore held that such
purchases to the extent of Rs.6,06,484/- were bogus purchases. The
Assessing Officer, therefore, added the entire amount in the income
of the assessee.
The
assessee appealed against the decision of the Assessing Officer. CIT
(Appeals), though found that the purchase was bogus decided to add
only 30% thereof in the income of the assessee i.e. Rs.1,81,945/- and
granted relief to the extent of Rs.4,24,539/-. This was primarily on
the basis that though the purchases were not genuine, payments were
made by cheque from explained funds of the business. CIT (Appeals)
held that the argument of the Assessing Officer that suppliers have
been paid out of unexplained funds is not tenable and that the
entire payments were made from the books. CIT (Appeals), therefore,
observed that only one presumption was possible, i.e. materials were
purchased from open market incurring cash payment and bills were
taken from paper concerns like Girnar Sales Corporation or Shiv Metal
Corporation.
Issue
was carried in appeal by the assessee as well as by the Revenue. The
Tribunal dismissed the appeal of the revenue while partially
allowing the appeal of the assessee reducing the addition to 25% of
the disputed amount. Thereupon, Revenue is in appeal before this
Court.
Upon
perusal of the orders on record with the assistance of the learned
counsel for the Revenue, we find that though the purchases were
believed to be bogus, CIT (Appeals) found that payments were made
from disclosed sources. CIT (Appeals) was, therefore, of the opinion
that such purchases would have been made from other individuals but
bills might have been obtained from recognized parties. On that
basis, CIT (Appeals) was pleased to partially allow the appeal of the
assessee as stated above. The Tribunal relying on its previous
judgment reduced further to the extent of 25%.
Though
we find that the counsel for the Revenue may not be entirely
inaccurate in contending that the Tribunal replaced the formula
adopted by the CIT (Appeals) of 30% by replacing 25% without
elaborate reasons, we are broadly in agreement with the conclusion
of the Tribunal. Counsel for the Revenue has placed reliance on a
decision of the Delhi High Court in the case of CIT v. La
Medicane, 250 ITR 575, the said decision was, however, in the
background of the facts where purchases were made from undisclosed
source by the assessee. We do not find any question of law
arising in this appeal. The appeal is therefore, dismissed.
(Akil
Kureshi, J.)
(Ms.Sonia
Gokani, J.)
(vjn)
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