SERUM INSTITUTE OF INDIA LTD.,,PUNE vs. DEPUTY COMMISISONER OF INCOME-TAX,,
No AI summary yet for this case.
Income Tax Appellate Tribunal, PUNE BENCH, ‘A’ PUNE
Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER R.S. SYAL, VP :
This appeal by the assessee is directed against the order
passed by the CIT(A)-11, Pune on 28-11-2014 in relation to the
assessment year 2009-10.
It is a recalled matter inasmuch as the earlier order passed
by the Tribunal on 08-06-2018 was subsequently recalled vide its
latter order dated 07-02-2023 in M.A.No.45/PUN/2022 for
disposal of Ground No.10 taken by the assessee in its
memorandum of appeal, which inadvertently remained to be
disposed off.
2 ITA No.1184/PUN/2015 Serum Institute of India Ltd.
Ground No.10 raised by the assessee, reads as under :
“10. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in upholding the disallowances of purchases of Rs.43,47,750/- by treating the same as ‘Bogus purchases’.
The facts concerning this issue are that the Assessing
Officer received information from the Sales Tax Department
through DGIT (Inv.), Pune containing list of parties which were
declared by Sales Tax Department as Hawala operators, who
provided only accommodation entries without supplying
materials. On verification of such list, it was found that the
assessee had taken accommodation entries from six parties
totaling to Rs.43,47,750/- during the year under consideration.
The assessee was called upon to furnish the details of items
purchased from these parties along with supporting vouchers, gate
passes and lorry receipts etc. so as to prove the genuineness of the
transactions. In the absence of the assessee furnishing requisite
details, the AO opined that the aforesaid amount of
Rs.43,47,750/- was liable to be added as non-business
expenditure. The assessee’s contention that it had non-business
expenditure offered during the course of search amounting to
Rs.2.00 crore and the unutilized part of the same should be
3 ITA No.1184/PUN/2015 Serum Institute of India Ltd.
adjusted against the instant disallowance, came to be accepted by
the AO, who eventually made disallowance at Rs.6,60,106/-,
thereby adjusting unutilized amount of surrender at
Rs. Rs.36,83,644/-. The ld. CIT(A) echoed the assessment order
on this point. Aggrieved thereby, the assessee has come up in
appeal before the Tribunal.
Having heard the rival submissions and perused the relevant
material on record, it is seen as an admitted position that the
assessee could not substantiate the genuineness of transactions
representing purchase recorded from six parties totaling to
Rs.43,47,750/- in respect of which information was received from
Sales Tax Department about the assessee having obtained
accommodation entries. In that view of the matter, the
genuineness of the purchase transactions does not get established.
At the same time, it is an admitted position that the assessee
maintained proper stock records and the said purchases were duly
recorded in the books of account. When purchases are bogus and
recorded in the books of account, addition can be made only to
the extent of difference between the gross profit rate on genuine
purchases and gross profit rate on bogus purchases and not the
full amount of purchases. The Hon’ble Bombay High Court in
4 ITA No.1184/PUN/2015 Serum Institute of India Ltd.
Pr.CIT Vs. M/s. Mohammad Haji Adam and Company (2019) 104
CCH 0391 Mum-HC has held to this extent. The Hon’ble
Bombay High Court in Pr.CIT Vs. Batilboi Environmental
Engineering Ltd. (2022) 446 ITR 238 (Bom.) held that only the
profit element in the bogus purchases should be added, which in
that case was 12.5%. Still in another case, the Hon’ble Bombay
High Court in Pr.CIT Vs. Jakharia Fabric Pvt. Ltd. (2020) 429
ITR 332 (Bom.) upheld the order of the Tribunal making addition
towards the additional profit @17.5% of bogus purchases. In
view of the above discussion and the ratio laid down in the
aforenoted judgments, it is clear that only the profit element can
be added and not the gross amount of bogus purchases.
Adverting to the facts of the instant case, it is seen that the
assessee made bogus purchases of Rs.43,47,750/-. As against the
amount of such bogus purchases, unutilized surrender of
Rs.36,83,644/- was adjusted by the AO towards the addition,
meaning thereby that the addition to that extent got confirmed and
adjusted against the amount already surrendered by the assessee,
leaving the net amount of disallowance at Rs.6,60,106/-. The
amount of set off of Rs.36,87,644/- represents 85% of the amount
of bogus purchases. The ld. AR submitted that the assessee had
5 ITA No.1184/PUN/2015 Serum Institute of India Ltd.
profit margin of 22.83%. Addition confirmed and adjusted at 85%
of the bogus purchases is far in excess of the gross profit margin
on such accommodation entries. This proves that the amount of
addition sustained at Rs.6,60,106/- is not called for. The same is
directed to be deleted. This ground is allowed.
In the result, the appeal of the assessee is partly allowed in
totality. Order pronounced in the Open Court on 20th June, 2023.
Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 20th June, 2023 सतीश आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The Respondent 2. 3. The CIT (Central), Pune 4. DR, ITAT, ‘A’ Bench, Pune गाड� फाईल / Guard file. 5.
आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
ITA No.1184/PUN/2015 Serum Institute of India Ltd.
Date 1. Draft dictated on 19-06-2023 Sr.PS 2. Draft placed before author 20-06-2023 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *
