PANCHSHEEL REALTECH PVT. LTD.,NOIDA vs. DCIT, GHAZIABAD

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCHES : “F” NEW DELHI ] BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI O. P. KANT, ACCOUNTANT MEMBER I.T. Appeal Nos. 5087 to 5091/Del/2016 Assessment Years : 2009-10 to 2013-14 Panchsheel Buildtech Pvt. Ltd., DCIT, H–169, Sector : 63, Vs. Central Circle, Noida [U.P.] Ghaziabad. PAN : AAECP 3492 N A N D I.T. Appeal Nos. 5062 to 5066/Del/2016 Assessment Years : 2009-10 to 2013-14 Panchsheel Realtech Pvt. Ltd., DCIT, H–169, Sector : 63, Vs. Central Circle, Noida [U.P.] Ghaziabad. PAN : AAECP 5726 F (Appellants) (Respondents) Assessee by : Shri Sanjay Mehra, C. A.; Department by : Ms. Paramita Tripathy, CIT [DR]; Date of Hearing : 27.03.2017 Date of Pronouncement : 22.06.2017 O R D E R PER I. C. SUDHIR, J. M. : to 5091/Del/2016 – [A.Ys.: 2009-10 to 2013-14] Panchsheel Buildtech Pvt.Ltd. :

The assessee has preferred the above appeals against the first appellate orders on following common grounds [except the issue raised in ground No. 3 in the appeals for assessment years 2009-10 and 2011-12] :-

“ 1. That on the facts and in the circumstances of the case, the ld CIT (A) has erred in sustaining the disallowance of Rs.3,89,19,668/- (in assessment year 2009-10, Rs.12,40,67,095/- in assessment year 2010-11, Rs.18,47,77,315/- in assessment year 2011-12, Rs.35,41,178/- in assessment year 2012-13 and Rs.6,78,500/- in assessment year 2013-14 made by the ld Assessing Officer (AO) by arbitrarily treating properly documented bona fide purchases as “bogus” and making addition thereof.

1.1 That the ld AO has erred in holding and the ld CIT (A) has erred in confirming the above purchases to be “bogus” even though such purchases were duly supported by bills and all payments for the same were made through regular banking channel.

1.2 That the authorities below have erred in ignoring the basic fact that materials covered by all the purchases were received at various work sites, duly entered in the stock register maintained in the regular course of business, consumed, and, finished product either sold or formed part of inventory.

1.3 That all primary evidences having been produced, which were not disproved, the appellant company had squarely discharged its onus to prove genuineness of the purchases in question.

1.4 That no defect whatsoever was found in the regularly maintained audited books of account and the trading result, as shown, was accepted.

1.5 That the authorities below have erred in unnecessarily placing reliance on withdrawals of funds by the sellers from their bank accounts without any evidence or even any allegation that the money so withdrawn had travelled back to the appellant company.

1.6 That the authorities below have erred in placing reliance on the alleged statements of M/s. A. K. Traders and M/s. S. R. Enterprises without providing the same to the appellant company and allowing to it the opportunity to cross examine.

1.7 That the authorities below have erred in not appreciating that without corresponding and essential inputs, the sales and closing stock, which were accepted as shown, could not have been achieved.

1.8 That the authorities below erred in not appreciating that all the purchases were made bona fide for business purposes from unrelated third parties on whom the appellant company had no control.

1.9 That the ld CIT (A) erred in summarily rejecting as “general and vague submissions” the detailed arguments of the appellant company which were duly supported by evidences filed in the form of “Paper- Book(s)” and in disregarding reliance placed by it on various case laws as “distinguishable” without giving any reason.

1.10 That the ld CIT (A) erred in drawing adverse inference from the comment “N.A.” made by the Auditor against column 28(a) of the audit report in Form No. 3 CD and on that basis making an unfounded and unwarranted observation that “it cannot be said that the accounts of the appellant are free from doubt”.

2. That receipt of materials and utilization thereof having been conclusively proved, the ld AO has erred in making the impugned addition and the ld CIT (A) has erred in sustaining the same in view of the well settled law that if purchases themselves are not bogus but are shown to have been made from bogus parties, not the entire purchase but only the profit element embedded in such purchases could be added to the income of the assessee.

3. That, as on 13-02-2013, i.e., the date of initiation of the search, there was no “pending” assessment or reassessment, and, as such, in the absence of any incriminating material, the impugned addition made by the ld AO and sustained by the ld CIT (A), is beyond the scope and jurisdiction of section 153A of the Act (in assessment years 2009-10 and 2011-12 only).

2. We note that in the assessment years 2009-10 and 2011-12 issue questioning the validity of addition made in the assessment framed under section 153A of the Act, in absence of finding of incriminating material during the course of search and in absence of abetment of assessment on the date of search, has been raised.

2.1 The relevant facts are that assessee is engaged in the business of real estate development and related activities especially development and sales of flats. A search and seizure operation under section 132 of the Act was conducted on 13.02.2013 on the premises of the assessee comprising Panchsheel Group of cases. The assessee filed its return of income in response to notice issued under section 153A and in the assessment the Assessing Officer disallowed claimed purchases of material. He noted that a search and seizure operation was conducted on 9.09.2010 in the case of M/s. A. K. Traders Group of cases from whom assessee had made certain purchases. During the search and thereafter such parties had admitted that they were engaged in the business of entry providers and no actual sale of material were made by them. As per the assessment order, similar admissions were also made by Shri Sanjay Thakur, Proprietor of M/s. Sigma Sales Corporation that he was also an entry provider. The Assessing Officer has accordingly doubted the genuineness of the claimed purchases and has disallowed part of the purchases on the ground that they were not found on the given addresses. The ld. CIT (Appeals) has upheld the same. The contention of the assessee remained that the disallowance was not based upon the incriminating material found during the course of search and on the date of search the assessments were not abated, hence the disallowance made in the assessment framed under section 153A is not valid. We, however, find that no such issue as raised in ground No. 3 herein, was raised either before the Assessing Officer or before the ld. CIT (Appeals). In other words, the issue raised does not emanate from the orders of the authorities below. Since no application for permission to raise additional ground and adjudication thereof has been moved by the assessee before the Tribunal [as required by the Rules 11 of ITAT Rules], we are not inclined to entertain ground No. 3 in question. The ground No. 3 raised in the appeals for the assessment years 2009-10 and 2011-12 is accordingly rejected.

2.2 Ground Nos. 1, 1.1 to 1.10 and 2 : In these grounds the assessee has questioned the disallowance made and upheld by the authorities below on account of the alleged bogus purchases. The Assessing Officer doubted the genuineness of the claimed purchases made by the assessee mainly on the ground that they were not found on the addresses given. The contention of the assessee remained that all the transactions were made through banking channels and sales have not been disputed thus only because they were not found on the addresses given, disallowance cannot be made.

2.3 In support of the above grounds the ld. AR submitted that relevant suppliers from whom purchases of materials have been made, do not have any type of relationship either with Panchsheel Buildtech Pvt. Ltd. or any of its Directors, except that of vendor and vendee in the normal course of business. The Assessing Officer disallowed the claimed purchases of those parties, who were issued with notices under section 133(6) and those notices were returned back unserved and those parties were not produced before him. The Assessing Officer overlooked the fact that in respect of such bonafide transactions, bills were produced and materials received were duly entered in the site stock records and payments were made by account payee cheques. The closing stock and sales of purchased goods have not been doubted by the Assessing Officer, books of accounts of the assessee have not been rejected as even after search operation, no fault / discrepancies were found in the books of accounts regularly maintained, site stock registers are showing receipt of goods issued for production. He referred page Nos. 283 to 292 and 305 to 314 of the paper book, which are copies of bills issued by different parties as well as material receipt vouchers issued by the assessee on different dates. At page Nos. 104 to 280 of the paper book have been placed stock registers for all the sites. Thus, he submitted that initial onus to establish the genuineness of the claimed purchases was discharged by the assessee and thereafter onus was shifted upon the Assessing Officer to which he has failed to discharge and has made the disallowance merely on the basis that the parties / suppliers were not found on the addresses given. Non-availability of the parties cannot be a ground for doubting the genuineness of the claimed purchases. In support he placed reliance on the following decisions :-

(i) CIT Vs. Nangalia Fabrics (P) Ltd. 220 Taxman 17 (Guj.); (ii) CIT Vs. Panchamdas Jain 205 CTR 444 (All.);

(iii) Sri Ganpatraj A. Sanghavi Vs. ACIT, (A.Y. 2009-10) [order dated 5.11.2014];

(iv) Nisraj Real Estate and Export (P) Ltd. Vs. ACIT, 209 – (031) – DTR – 0456 – TJAI; (v) CIT Vs. Adinath Industries (2001) 252 ITR 476 (Guj.) [SLP dismissed] reported in 247 ITR (St.) 35; (vi) ACIT Vs. D. M. Brothers, 2010 – (044) – DTR – 0013 – All.; (vii) CIT Vs. Joginder Singh & Co. (2014) 361 ITR – 0078 (All.).

2.4 The ld. AR has furnished following party wise submissions in a tabular form :-

“ M/s Panchsheel Buildtech Pvt. Ltd. ASSESSMENT YEAR : 2009-10 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED M/s Amba Steel 1789283 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Ashoka 12358447 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s India Building 6859019 1.Copy of 1. All payments by Purchase Bill. account payee Materials Suppliers 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Jai Bharat 9993835 1.Copy of 1. All payments by Purchase Bill. account payee Building Material 2. Copy of Site cheque & NO cash Store Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Satya sales 5852604 1.Copy of 1. All payments by Purchase Bill. account payee Corporation 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Sai Traders 2066480 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments Total 38919668 ASSESSMENT YEAR : 2010-11 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED M/s A.K. Traders 7055422 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Aman 1497890 1.Copy of 1. All payments by Purchase Bill. account payee Associates 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Anjail Traders 3744933 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Ashoka 1.Copy of 1. All payments by 22018322 Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Bhagwati 1911525 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Bharat Traders 11460465 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Ganesh 11448895 1.Copy of 1. All payments by Purchase Bill. account payee Traders 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Ganga Trading 6918080 1.Copy of 1. All payments by Purchase Bill. account payee Co.

2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Gayatri Traders 8749182 1.Copy of 1. All payments by Purchase Bill. account payee

2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Jai Bharat 2554995 1.Copy of 1. All payments by Purchase Bill. account payee Building Material 2. Copy of Site cheque & NO cash Stock Register transactions Store showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Maha Laxmi 1150777 1.Copy of 1. All payments by Purchase Bill. account payee Machinery 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Om Traders 9371307 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s S.R. 2105206 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Satya Sales 2217758 1.Copy of 1. All payments by Purchase Bill. account payee Corporation 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shallu 6420459 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shree Radhe 6624446 1.Copy of 1. All payments by Purchase Bill. account payee Trading Co.

2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shree Radhey 3526332 1.Copy of 1. All payments by Purchase Bill. account payee Trading Company 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Sigma Sales 3556499 1.Copy of 1. All payments by Corporation Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Gagan Traders 4319073 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s India Sales 1000025 1.Copy of 1. All payments by Purchase Bill. account payee Corporation 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s P.K. Metals 2195327 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Vijay Laxmi 4220177 1.Copy of 1. All payments by Purchase Bill. account payee Traders 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of

3. Copy of Party assessee ledger reflecting transaction and payments

Total 124067095 ASSESSMENT YEAR : 2011-12 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED M/s A.K. Traders 10569372 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Anjail Traders 10278914 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Annpurna 11318672 1.Copy of 1. All payments by Purchase Bill. account payee Traders 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Bhagwati 14021644 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Ganga Trading 6721227 1.Copy of 1. All payments by Purchase Bill. account payee Co.

2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Gayatri Traders 5788079 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Gayitri Traders 10678648 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s N.S. Metal 17820037 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Om Traders 3638250 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s R.K. 23366763 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Stock cheque & NO cash Register showing transactions receipt of material.

2. Party not related 3. Copy of Party or associate of ledger reflecting assessee transaction and payments M/s Shree Radhey 13003501 1.Copy of 1. All payments by Purchase Bill. account payee Trading Company 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shri Shanker 19674318 1.Copy of 1. All payments by Purchase Bill. account payee Traders 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee

ledger reflecting transaction and payments M/s Bhagwati 2657151 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Gagan Traders 2545620 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Gaurav Traders 3268411 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s New Payal 3273734 1.Copy of 1. All payments by Purchase Bill. account payee Traders 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s O.K. Traders 3487293 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Om Jyoti 615878 1.Copy of 1. All payments by Purchase Bill. account payee Engineering 2. Copy of Site cheque & NO cash Stock Register transactions Enterprises showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s P.K. 8015115 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Poornima 581801 1.Copy of 1. All payments by Purchase Bill. account payee Steels Traders 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shree Radhey 13452887 1.Copy of 1. All payments by Purchase Bill. account payee Traders 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of

3. Copy of Party assessee ledger reflecting transaction and payments Total 184777315 ASSESSMENT YEAR : 2012-13 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED M/s Aman 678500 1.Copy of 1. All payments by Purchase Bill. account payee Associates 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments Total 678500 ASSESSMENT YEAR : 2013-14 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED Shri Krishna 3541178 1. Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments Total 3541178 ”

2.5 As an alternative argument and without prejudice to the above submission, the ld. AR submitted that even if for the sake of argument, the books of accounts are rejected, the profit has to be computed on the sales made by the assessee and the pre-emptive profit in the case of Civil Contractors is 8%, though the provisions under section 44AD are not applicable in the present case, but the guideline provided therein can be used. In support he placed reliance on the decision of Hon’ble High Court of Rajasthan in the case of Gotan Lime Khanij Udyog (2002) 256 ITR 243 (Raj). The ld. AR also referred page No. 13 of the paper book Vol.–II, wherein comparative chart showing year-wise NP rate has been shown. He also referred page No. 16 of the paper book Vol.–II i.e. copy of assessment framed under section 143(3) of the assessment year 2014-15 in the case of assessee itself by applying NP rate.

2.6 The ld. CIT [DR], on the other hand, placed reliance on the orders of the authorities below. She submitted that onus always lies upon the claimant to establish the genuineness of the claim to which the assessee before us has thoroughly failed to. The assessee in the present case could not establish the genuineness of the claimed purchases as most of the parties were not found on the given addresses nor were they produced before the Assessing Officer for verification of the claim of purchases made by the assessee. The Assessing Officer was thus justified in making the addition on account of bogus purchases in the present case. The Assessing Officer is justified in his action also because he has not denied the entire claim, but has denied only those claims wherein the assessee has failed to establish the genuineness of the claimed purchases. The arguments advanced by the ld. AR are general in nature, which cannot be accepted.

2.7 In rejoinder the ld. AR submitted that all the payments have been made through cheques, accounts are audited and accepted, ledger was made available and all the necessary evidences in support of the claimed purchases were produced before the Assessing Officer. Thus, the assessee had discharged its primary onus in establishing the genuineness of the claimed purchases. The onus was thereafter shifted upon the Assessing Officer to rebut those evidences filed by the assessee. Only because after lapse of years, the parties were not found on the given address, cannot be a sole ground for the denial of the genuineness of the claimed purchases, especially when construction / sales made by the assessee have not been denied.

2.8 Considering the above submission, we find that the Assessing Officer in the present case has doubted the genuineness of the claimed purchases of material from 6 parties in the assessment year 2009-10, 22 parties in the assessment year 2010-11, 21 parties in the assessment year 2011-12, 1 party each in the assessment years 2012-13 and 2013-14. He disallowed the claimed purchases made from these parties on the basis that they were not found on their given addresses. The A. K. Traders Group and M/s. Sigma Sales Corporation from whom the assessee had made purchases, had admitted that they were engaged in the business of entry provider and no actual sale of material were by them. The Assessing Officer noted further that bank accounts of the parties showed a unique trend as the payments though were made through cheques, such cheques were deposited and the amounts were withdrawn shortly thereafter in cash. Under these facts and circumstances, it is very difficult to arrive at the conclusion that the claimed purchases by the assessee were entirely free from any doubt. However, the non-interference by the Assessing Officer to the claimed sales supports the case of the assessee that materials were purchased. Undisputedly, payments to these parties, who had supplied material to the assessee have been made through banking channels. The Assessing Officer has tried to make it a case of purchases, which have been made through books of accounts, but have been found bogus. Taking all these facts in its totality, we are of the view that a balance between the assessee and the Revenue can be made by estimating profit of the assessee for the purpose of taxation to plug the leakage, if any. We find that in the assessment year 2014-15 the Assessing Officer in the assessment framed under section 143(3) has accepted the net profit of Rs.28,66,08,537/- on a turnover of Rs.4,01,15,91,110/- giving NP rate of 7.14%. It is a best comparable instance and accordingly we find it reasonable to apply NP rate of 8% or such higher rate as declared by the assessee for estimating the net profit liable to tax on the declared turnover. We order accordingly with further direction to the Assessing Officer that no other deduction shall be allowable therefrom. The grounds are accordingly allowed partly.

3. In result, appeals are partly allowed. to 5066/Del/2016 – [A.Ys.: 2009-10 to 2013-14] Panchsheel Realtech Pvt.Ltd. :

“ 1. That on the facts and in the circumstances of the case, the ld CIT (A) has erred in sustaining the disallowance of Rs.1,48,27,798/- in assessment year 2009-10, Rs.3,76,11,789/- in assessment year 2010-11, Rs.2,68,31,678/- in assessment year 2011-12,

Rs.1,89,33,793/- in assessment year 2012-13 and Rs.3,09,93,648/- in assessment year 2013-14 made by the ld Assessing Officer (AO) by arbitrarily treating properly documented bona fide purchases as “bogus” and making addition thereof.

1.1 That the ld AO has erred in holding and the ld CIT (A) has erred in confirming the above purchases to be “bogus” even though such purchases were duly supported by bills and all payments for the same were made through regular banking channel.

1.2 That the authorities below have erred in ignoring the basic fact that materials covered by all the purchases were received at various work sites, duly entered in the stock register maintained in the regular course of business, consumed, and, finished product either sold or formed part of inventory.

1.3 That all primary evidences having been produced, which were not disproved, the appellant company had squarely discharged its onus to prove genuineness of the purchases in question.

1.4 That no defect whatsoever was found in the regularly maintained audited books of account and the trading result, as shown, was accepted.

1.5 That the authorities below have erred in unnecessarily placing reliance on withdrawals of funds by the sellers from their bank accounts without any evidence or even any allegation that the money so withdrawn had travelled back to the appellant company.

1.6 That the authorities below have erred in placing reliance on the alleged statements of M/s. A. K. Traders and M/s. S. R. Enterprises without providing the same to the appellant company and allowing to it the opportunity to cross examine.

1.7 That the authorities below have erred in not appreciating that without corresponding and essential inputs, the sales and closing stock, which were accepted as shown, could not have been achieved.

1.8 That the authorities below erred in not appreciating that all the purchases were made bona fide for business purposes from unrelated third parties on whom the appellant company had no control.

1.9 That the ld CIT (A) erred in summarily rejecting as “general and vague submissions” the detailed arguments of the appellant company which were duly supported by evidences filed in the form of “Paper- Book(s)” and in disregarding reliance placed by it on various case laws as “distinguishable” without giving any reason.

1.10 That the ld CIT(A) erred in drawing adverse inference from the comment “N.A.” made by the Auditor against column 28(a) of the audit report in Form No. 3 CD and on that basis making an unfounded and unwarranted observation that “it cannot be said that the accounts of the appellant are free from doubt”.

2. That receipt of materials and utilization thereof having been conclusively proved, the ld AO has erred in making the impugned addition and the ld CIT(A) has erred in sustaining the same in view of the well settled law that if purchases themselves are not bogus but are shown to have been made from bogus parties, not the entire purchase but only the profit element embedded in such purchases could be added to the income of the assessee.

3. That, as on 13-02-2013, i.e., the date of initiation of the search, there was no “pending” assessment or reassessment, and, as such, in the absence of any incriminating material, the impugned addition made by the ld AO and sustained by the ld CIT (A), is beyond the scope and jurisdiction of section 153A of the Act (in assessment years 2009-10 and 2011-12 only).

4.1 So far as the issue raised in ground No. 3 for the assessment years 2009-10 and 2011-12, regarding the validity of addition made in the assessment under section 153A in absence of incriminating material found during the course of search and in absence of abetment of assessment on the date of search is concerned, we find that no such ground was raised before the authorities below nor any application for permission to raise additional ground in this regard and its adjudication has been moved before the Tribunal. In such circumstances, ground No. 3 does not stand. The ground No. 3 is accordingly rejected as it is not arising out of the orders of the authorities below.

5.1 In support of the grounds, the ld. AR has adopted same argument as advanced by him in the appeals of Panchsheel Buildtech Pvt. Ltd., with the details of following parties as suppliers in the present case :-

“ M/s Panchsheel Realtech Pvt. Ltd. ASSESSMENT YEAR : 2009-10 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED M/s Ashoka 945000 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s India Building 5118273 1. Copy of 1. All payments by Purchase Bill. account payee Materials Suppliers 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Satya sales 5279501 1. Copy of 1. All payments by Purchase Bill. account payee Corporation 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shree Radhe 3485024 1. Copy of 1. All payments by Purchase Bill. account payee Trading Co. 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments Total 14827798 ASSESSMENT YEAR : 2010-11 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED M/s A.K. Traders 4613184 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Ashoka 1532250 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Bhagwati 10242354 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Satya Sales 1692548 1.Copy of 1. All payments by Purchase Bill. account payee Corporation 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shallu 6521644 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shree Radhe 1844013 1.Copy of 1. All payments by Purchase Bill. account payee Trading Co.

2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shree Radhey 1199139 1.Copy of 1. All payments by Purchase Bill. account payee Trading Company 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Shri Durga 3270668 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Sigma Sales 3058703 1.Copy of 1. All payments by Purchase Bill. account payee Corporation 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Indian Agency 1178343 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Laxmi Traders 1413776 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee

ledger reflecting transaction and payments M/s Shakti 1045167 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments

Total 37611789 ASSESSMENT YEAR : 2011-12 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED M/s Anjail Traders 3464379 1.Copy of 1. All payments by Purchase Bill. account payee 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Bhagwati 9394448 1.Copy of 1. All payments by Purchase Bill. account payee Enterprises 2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of

2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Sai Nath 4173300 1.Copy of 1. All payments by Purchase Bill. account payee Traders (TIN- 2. Copy of Site cheque & NO cash Stock Register transactions 9788814014) showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments M/s Sai Nath 1410947 1.Copy of 1. All payments by Purchase Bill. account payee Traders (TIN- 2. Copy of Site cheque & NO cash Stock Register transactions 9588814284) showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments Total 26831678 ASSESSMENT YEAR : 2012-13 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED M/s Shri Radhey 769003 1.Copy of 1. All payments by Purchase Bill. account payee Trading Co.

18933793 Total ASSESSMENT YEAR : 2013-14 PARTY NAME Amount of DOCUMENTS ADDITIONAL PURCHASES SUBMITTED REMARKS UNVERIFIED 30993648 M/s A.M. Industries 1.Copy of 1. All payments by Purchase Bill. account payee

2. Copy of Site cheque & NO cash Stock Register transactions showing receipt of 2. Party not related material. or associate of 3. Copy of Party assessee ledger reflecting transaction and payments Total 30993648 ”

5.2 Without prejudice to the above submission and as an alternative argument, the ld. AR submitted that net profit may be estimated for the purpose of taxable income and submitted similar arguments as advanced by him in the above appeals of Panchsheel Buildtech Pvt. Ltd. He pointed out that in the assessment under section 143(3) for the assessment year 2014-15 i.e. immediately succeeding year the net profit of Rs.2,02,92,980/- on a turnover of Rs.36,75,39,959/- giving net profit rate of 5.52% has been accepted by the Assessing Officer.

5.3 The ld. CIT [DR], on the other hand, has also adopted similar arguments as advanced by her in the appeals for 5.4 We find that similar are the facts of the present case as those in the case of Panchsheel Buildtech Pvt. Ltd. on an identical issue decided above. Under similar facts in the present case the Assessing Officer made addition of Rs.3,09,93,648/- in assessment year 2013-14, Rs.1.18,33,793/- in assessment year 2012-13, Rs.2,68,31,678/- in assessment year 2011-12, Rs.3,76,11,789/- in assessment year 2010-11 and Rs.1,48,27,798/- in assessment year 2009-10 on account of bogus purchases made by appellant from various concerns. We find that in the immediately succeeding year i.e. assessment year 2014-15 in the assessment framed under section 143(3) the Assessing Officer has accepted net profit of Rs.2,02,92,980/- on a turnover of Rs.36,75,39,959/- giving NP rate of 5.52%. We thus adopting the same reasons as noted by us in the above appeals of Panchsheel Buildtech Pvt. Ltd. are of the view that it would be just and proper to apply NP rate of 6% or such higher rate as declared by the assessee on the declared turnover to work out taxable income for the assessment years under consideration. No other deduction shall be allowed therefrom. It is ordered accordingly. The grounds 1, 1.1 to 1.10 and 2 are thus partly allowed.