High Court Of Gujarat
CIT vs. Sathyanarayan P. Rathi
Asst. Year 2003-2004
Akil Kureshi & Sonia Gokani, JJ.
TA No. 607 of 2012
28th January, 2013
Counsel appeared
KM Parikh, Advocate for the Appellant(s)
AKIL KURESHI, J.
1. Revenue is in appeal against the judgment and order of the Tribunal dated 10.02.2012. Following question has been raised for our consideration: “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in restricting the disallowance to the extent of 12.5 percent of the addition on account of bogus purchase, without appreciating the factual aspect and by ignoring the manifest evidence relied upon by the Assessing Officer and overlooking the ratio laid down by the Hon’ble High Court in the case of Pawanraj B. Bokadia in Tax Appeal No.3245 of 2009 dated 29/09/2011”
2. Issue pertains to bogus trade made by the respondent-assessee. Assessee is in the business of trading in iron and steel. For the Assessment Year 2003-2004, during the reassessment proceedings, it was found that the purchases worth Rs. 61.40Lacs (rounded off) were not supported by sufficient evidence. The assessee’s claim of having purchased such goods from various suppliers was verified, but was not found genuine. It was found that such parties had never supplied the goods as named by the assessee. On such basis, the Assessing Officer made addition of entire amount of purchase of Rs.61.40Lacs (rounded off). The assessee carried the matter in appeal and CIT(Appeals) partly allowed the appeal. It was found that though the purchases were not made from the parties from whom the assessee claimed, there was complete quantitative tally of material purchased and sold. In that view of the matter, CIT(Appeals) was of the view that such materials were purchased from the open market incurring cash payment and bills were procured from various sources. Resultantly, Commissioner(Appeals) added only profit element and not the entire amount of the said purchase, for the limited addition to 30 percent of the total amount and reduced the same to Rs.18.42Lacs (rounded off).
3. Assessee carried the issue in further appeal before the Tribunal. The revenue also preferred appeal against the order of Commissioner(Appeals). Both these appeals came to be decided by the Tribunal by the impugned judgment. The Tribunal gave further relief to the assessee and refused addition to the level of 12 1/2 percent in pursuance of the various purchases. Revenue’ appeal was dismissed.
4. We are of the opinion that the revenue ought to have preferred two appeals if the revenue was aggrieved by the Tribunal’s verdict of not only rejecting its appeal but of allowing assessee. However, when we are not inclined to interfere with the Tribunal’s order on merits, we do not insist on the revenue’s filing a separate appeal.
5. From the record, we noticed that the Commissioner (Appeals) as well as the Tribunal found that the purchase of raw-material, in which the assessee was trading, were only made, but not from the disclosed sources. In other words, the case against the assessee was that the purchases were made in the grey market through cash payment and some entries were obtained from certain suppliers who had not sold such goods.
The present case, thus, being one of only purchase but not from disclosed sources, it would be only profit element embodied in such purchase which could be added in the income of the assessee and thus, rightly so done by the Commissioner(Appeals) and the Tribunal. If this be our conclusion, only question arises whether such profit element should be estimated at the rate of 30 percent or 12 1/2 percent. Whenever such a question arises, some reasonable estimation is always permissible. Hardly any question of law on such aspect would arise. Merely, it is pointed out that the assessee was a trader and that the Tribunal retained 12 1/2 percent of the purchase towards its possible profit, we do not find any reason to entertain the appeal. In the result, Tax Appeal is dismissed.
[Citation : 351 ITR 150]
