ROHAN TOOLING SOLUTIONS INDIA PVT. LTD.,GURGOAN vs. ITO, WARD- 21(3), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI

BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No. 6583/Del/2018 Assessment Year: 2010-11

M/s. Rohan Tooling Vs. ITO, Ward-21(3), Solutions Pvt. Ltd. C/o New Delhi. CA MR Sahu, M. Sahu & Associates, CA, House No.651, Ist Floor, Sector 10A, Nr. Meenakshi Public School, Gurgaon- 122001 (Hr.) PAN :AACCR7221B (Appellant) (Respondent)

Appellant by Shri M.R. Sahu, CA Respondent by Shri Om Parkash, Sr. DR

Date of hearing 10.04.2023 Date of pronouncement 19.04.2023

ORDER This is an appeal by the assessee against order dated 23.08.2018

of learned Commissioner of Income-Tax (Appeals)-7, New Delhi

pertaining to assessment year 2010-11.

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necessary to observe, this appeal was disposed of earlier by the

Tribunal vide order dated 22.18.2019. However, while disposing of

the appeal, the additional ground raised by the assessee, inadvertently,

remained undecided. Therefore, the assessee filed a miscellaneous

application under Section 254(2) of the Income-Tax Act, 1961, being

MA No.887/Del/2019, seeking rectification of the order.

vide order dated 14.02.2023 recalled the appellate order for the limited

purpose of adjudicating the following additional grounds:

i) On the facts and circumstances of the case and in law, the appellant submits that sales amount and quantitative details of opening stock, purchases, sales, closing stock are duly accepted by A.O in such situation entire bogus purchases of Rs.30,00,000/- would not be held as undisclosed income rather profit margin embedded in such purchases would be subject to tax having regard to the ratio of the decision of Hon'ble Gujarat HC in the case of CIT vs. Bholanath Pvt. Ltd. (2013) 355 ITR 290 (Guj.HC).

ii) AR of the assessee is humbly praying before your good self to accept the additional ground of appeal raised before date of hearing of appeal having regard to the ratio of the decision of the Hon'ble Supreme Court in the case of National Thermal Power Corporation vs. CIT (1998) 229 ITR 383 (SC).”

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fresh investigation into facts, I am inclined to admit the additional

grounds.

assessee is a resident corporate entity stated to be engaged in the

business of trading in chemicals. For the assessment year under

dispute, the assessee had filed its return of income on 28.09.2010

declaring income of Rs.10,78,300. Subsequently, the Assessing

Officer received information from the investigation wing indicating

that the assessee has availed accommodation entry by way of bogus

purchases worth Rs.30,00,000 from M/s. Global Trading Corporation.

Based on such information, the Assessing Officer reopened the

assessment under Section 147 of the Act.

called upon the assessee to prove the genuineness of the purchases of

Rs.30,00,000 from M/s. Global Trading Corporation. As observed by

the Assessing Officer, in course of assessment proceedings, though,

inquiry was carried on to ascertain the genuineness of the purchases

by issuing summons under Section 131 of the Act to the concerned

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entity, however, the summons returned back unserved. Even, notice

issued under Section 133(6) did not elicit any response from the

concerned party. Thus, ultimately, the Assessing Officer treated the

purchases of Rs.30,00,000 as unexplained investment and added back

to the income of the assessee. Though, the assessee contested the

addition before learned Commissioner (Appeals), however, the

addition was sustained.

that assessee’s accounts are under statutory audit and all purchase and

sale transactions including the transaction with M/s. Global Trading

Corporation were recorded in the books of accounts. He submitted,

even in the sales-tax return filed for the relevant financial year, the

assessee disclosed the purchases from M/s. Global Trading

Corporation and the corresponding sale transactions. He submitted,

quantitative tally of purchases and sales were furnished before the

Assessing Officer. Thus, he submitted, when sales effected by the

assessee have been accepted without any doubt, purchases could not

have been doubted. He submitted, even if there is some doubt

regarding the source of purchases, in that scenario, the entire

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purchases cannot be disallowed or treated as income of the assessee

but only the profit element embedded in such purchase can be

considered for addition. Thus, he submitted, the addition may be

restricted to the profit element.

observations of the Assessing Officer and learned Commissioner

(Appeals).

available on record.

shown purchases worth Rs.30,00,000 from M/s. Global Trading

Corporation. From the observations of the Assessing Officer in the

assessment order, it is evident that notice issued under Section 133(6)

of the Act seeking certain information from the concerned seller did

not evoke any response. Therefore, the Assessing Officer assumed that

the concerned party has provided accommodation entries without any

real transaction. However, it is a fact on record that assessee has not

only maintained books of account but its accounts are under statutory

audit. It is the contention of the assessee that all purchase and sale

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transactions have been duly recorded in the books of accounts. On a

careful reading of the assessment order, it is observed that the

Assessing Officer has not pointed out any deficiency in the books of

accounts maintained by the assessee. In fact, the Assessing Officer has

not rejected the books of accounts. The contention of the assessee that

all purchase and sales have been duly reflected in the sales tax return

and the fact that quantitative tally of purchase and sales have been

furnished before the Assessing Officer, could not be controverted by

the Revenue. In such a scenario, the fact that the assessee had

purchased the quantum of goods in dispute cannot be doubted for the

simple reason that in absence of such purchases, the assessee could

not have effected corresponding sales. Therefore, the doubt, if any,

remains only with regard to the source of purchases. Though, it may

be a fact that due to complete lack of response from the seller, the

authenticity of source of purchase could not be fully established,

however, it can be said that assessee might have purchased the goods

from unverified source to suppress its profit. In such situation, the

entire purchase cannot be treated as income of the assessee but only

the profit element embedded in such purchases can be considered for

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addition. From the material placed before me, it is observed that the

average profit margin of the assessee in different years works out to

5.8%.

the addition by estimating profit at 7% of the alleged bogus purchase

of Rs.30,00,000. In other words, the addition is restricted to 7% of

Rs.30,00,000. Ground is partly allowed.

Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 19th April, 2023. Mohan Lal