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Income Tax Appellate Tribunal, PUNE BENCHES “B” : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
ORDER PER BENCH :
This Revenue’s three appeals for assessment years 2009-2010 to 2011-12, arise against the CIT(A)-1, Nashik's as many orders; all dated 18.08.2015,; passed in case Nos. Nsk/CIT(A)-1/133, 134 & 135/2015-16; respectively, in proceedings u/sec.143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short "the Act").
Heard both the parties at length through their respective learned representatives. Case files perused.
A combined perusal of the instant three Revenue’s appeal files reveals that this is the second round of litigation 2 ITA.No.1407, 1408 & 1409/PUN/2015 between the parties before us. The Registry has listed all these three cases in light of hon’ble jurisdictional high court’s common remand directions in department’s Income Tax Appeal nos.673 and 750/2018 dated 21st October, 2022, for assessment years 2010-2011 and 2011-2012, as followed mutatis mutandis in the latter order dated 12.07.2023 in identical Tax Appeal No.685/2018 [A.Y.2009-2010]; respectively. Their lordships identical remand directions hereinabove read as follows :
3 ITA.No.1407, 1408 & 1409/PUN/2015 4 ITA.No.1407, 1408 & 1409/PUN/2015 5 ITA.No.1407, 1408 & 1409/PUN/2015 6 ITA.No.1407, 1408 & 1409/PUN/2015 It is in this factual backdrop we proceed to decide all these Revenue’s three appeals afresh as per its identical substantial question (d) framed in hon’ble jurisdictional high court and remanded to us.
Learned counsel representing assessee first of all submits that we ought to club/consolidate the assessee’s corresponding three appeals ITA.Nos.1365 to 1367/PUN./ 2015 as well since earlier common order dated 05.07.2017 stands reversed and therefore, the necessary consequence that flows therefrom is that the foregoing as many cases also deserve to be heard afresh. Mr. Joshi’s next submission is that our non-clubbing of all these cases would render the tribunal’s common order in his cases as attained finality. We find no merit in the assessee’s instant submissions once the issue before us is to the limited extent of applicability of hon’ble apex court’s decision in N.K. Proteins Ltd. vs. DCIT [2017] 84 taxmann.com 195 (SC) (supra) as per their lordships’ remand directions. That being the case, we hardly see any merit in assessee’s stand seeking to get his three appeals hereinabove listed for afresh hearing.
Next comes the sole surviving issue of applicability of hon’ble apex court’s decision in N.K. Proteins 7 ITA.No.1407, 1408 & 1409/PUN/2015 Ltd. vs. DCIT (supra) as per Revenue’s identical substantive question (d) framed before their lordships. We find during the course of hearing that their lordships’ yet other recent decision in [2019] 103 taxmann.com 459 (Bom.) PCIT vs. Mohammad Haji Adam & Co. has rejected applicability thereof in a similar case of bogus purchases in trading business as under :
8 In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected 8 ITA.No.1407, 1408 & 1409/PUN/2015 without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.R rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under – “So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.Q8 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66%. Therefore, considering 5.66% of Rs.3,70,78,125/- which comes to Rs.20,98,621.88 we think it fit to direct 9 ITA.No.1407, 1408 & 1409/PUN/2015 the revenue to add Rs.20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue.
9 In these circumstances, no question of law, therefore, arises. All Income Tax Appeals are dismissed, accordingly. No order as to costs.”
4.1. The factual position is hardly any different before us as well as the Revenue is fair enough throughout in not having rejected the assessee’s corresponding sales which stand duly assessed in accordance with law. We thus adopt their lordships’ detailed discussion mutatis mutandis to conclude that there is no need for us to revive the entire bogus purchase disallowances in very terms.
Mr. Jasnani next submitted that the CIT(A) herein has erred in law and on facts in restricting the impugned disallowance only to the extent of 5% GP component despite the fact that the assessee’s corresponding purchases have not been proved. Learned counsel on the other hand submitted that there were no evidence in case file to suggesting cash withdrawals from the corresponding 10 ITA.No.1407, 1408 & 1409/PUN/2015 suppliers’ accounts which could lead us to a conclusion that the purchases in question deserve to be disallowed in entirety. It is in this factual backdrop that we deem it appropriate to clarify that the question of assessee’s bogus purchases per se has already attained finality as per the Revenue’s substantive questions (a) to (c) in their lordships’ directions reproduced in preceding paragraphs.
Coming to the sole surviving question regarding the impugned disallowances involving GP component, learned counsel again referred to hon’ble jurisdictional high court’s decision in PCIT vs. M/s.Mohammad Haji Adam & Co. (supra) upholding the tribunal’s order to the extent it had directed the Assessing Officer to tax the assessee(s) concerned on the basis of difference in the GP rates of verified and unverified bogus purchases; as the case may be. So far as the assessee’s case before us in the lead assessment year 2009-2010 is concerned; a perusal of the assessment findings in para-7 indicates that his total purchases were of Rs.4,36,55,104/- followed by gross sales of Rs.4,39,62,711/- which included the bogus purchases from ‘hawala’ traders of Rs.2,45,93,371/- in question. The factual position is no different in the latter twin assessment years. We further note that the assessee could neither file 11 ITA.No.1407, 1408 & 1409/PUN/2015 confirmation of its suppliers nor the Assessing Officer’s notices could be served on them as per the assessment findings. Faced with this situation, Mr. Joshi has taken pains to compile the corresponding details in all these three assessment years regarding assessee’s bogus and unverified purchases for being assessed at uniform rate. We hold that once the bogus purchases have attained finality, the only consequence is that they do not deserve to be treated at par with the latter category in light of the overwhelming evidence in this case file. The Revenue has also quoted a catena of case law wherein such bogus purchases stand assessed at varying margins from 5-12%. We deem it appropriate in these peculiar facts to conclude that a lump sum disallowance of 6% in all these three cases would meet the ends of justice with a rider that the same shall not be taken as a precedent. Necessary computation shall follow as per law. We order accordingly.
All other pleadings on merits stand rendered academic in light of hon’ble jurisdictional high court’s foregoing remand directions (supra).
These three Revenue’s appeals are partly allowed in above terms. A copy of this common order be placed in the respective case files.
12 ITA.No.1407, 1408 & 1409/PUN/2015 Order pronounced in the open Court on 13.11.2023.