Ito v. Purushottam Shankar Kulkarni

Sushma Chowla, J.M.:— This appeal filed by the Revenue is against the order of CIT(A)-I, Nashik, dated 02.03.2012 relating to assessment year 2009-10 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).

2. The Revenue has raised the following grounds of appeal:—

1. On the facts and in the circumstances of the case the Honorable CIT(A)-I, Nashik erred in deleting the addition of Rs. 43,62,275/- made on account of bogus purchases claimed to be made from M/s. R.K. Ispat.

2. On the facts and in the circumstances of the case the Honorable CIT(A)-I, Nashik erred in deleting the addition of Rs. 1,50,000/- made on account of commission expenses which could not be justified/proved.

3. On the facts and in the circumstances of the case the Honorable CIT(A)-I, Nashik erred in granting relief to assessee on the basis of incorrect facts filed by assessee before the Honorable CIT(A) regarding utilization of the alleged purchases made from M/s. R.K. Ispat.

4. On the facts and in the circumstances of the case the Honorable CIT(A)-I, Nashik erred in granting relief to assessee in respect of the commission expenses on the basis of incorrect facts filed by assessee before the Honorable CIT(A) regarding the purpose for which the commission expenses was incurred.

5. On the facts and in the circumstances of the case sit is therefore requested to cancel the order of the Honorable CIT(A)-I, Nashik and restore the order of the Assessing Officer.

6. The appellant craves leave to add, amend, modify the grounds of appeal, if considered necessary subsequently.

3. The issue arising in the present appeal is against the order of CIT(A) in deleting the addition made on account of bogus purchases totaling Rs. 43,62,275/- from R.K. Ispat. The second issued raised by the Revenue is against the deletion of addition of Rs. 1,50,000/- made on account of commission expenses.

4. Briefly, in the facts of the present case, the assessee was an electrical contractor. For the year under consideration, the assessee had declared income of Rs. 11,29,526/-. During the course of assessment proceedings, the assessee produced the books of account. On the perusal of sundry creditors, the Assessing Officer noted sum of Rs. 43,62,275/- was outstanding against the name of M/s. R.K. Ispat. The Assessing Officer noted from the ledger accounts that the purchases were made from the said concern starting from 29.10.2008 and the last purchase was dated 02.02.2009. The payment to the said party was stated to be outstanding even on the last date of hearing of the assessment proceedings i.e. 21.12.2011. The assessee claimed that there was commercial dispute with the party and therefore, payment had not been made. In order to confirm the genuineness of purchase transactions, the Assessing Officer sent a letter to M/s. R.K. Ispat on the address provided by the assessee. The said letter was received back ‘undelivered’. The assessee was asked to file confirmation from the said concern and was also requested to produce evidence with regard to delivery of articles purchased to the site, where they were put to use. The assessee on 21.12.2011 filed the copy of ledger accounts of M/s. R.K. Ispat containing the rubber stamp “For R.K. Ispat”. The name of person who had signed was not mentioned by the signatory. Further, the address of said party was missing. The Assessing Officer asked the representative of the assessee to explain as to why the amount in respect of purchases was not paid till date. He was also reminded that no evidence like lorry receipt, delivery challan or octroi were submitted to prove the genuineness of purchases on 26.12.2011. The written submissions were filed and it was stated that the material were received at various sites and since they were received on the site, the delivery challans could not be preserved till date. The assessee also stated that the details as to where the materials were available and without material being used, the work could not be completed. The Assessing Officer rejecting the explanation of assessee in the absence of any delivery receipts being produced and payment having not been made to the said party till date, completion of assessment proceedings and in the absence of assessee having discharged his onus, the purchases made from M/s. R.K. Ispat to the tune of Rs. 43,62,275/- were added to the total income by holding the purchases to be bogus and booked only to reduce business income. Further, the assessee had claimed to have incurred expenditure on account of commission to various persons totaling Rs. 1,50,000/-, which was stated to be outstanding as on 31.03.2009. The assessee claimed that the same was paid subsequently on various dates from 30.06.2009 to 18.02.2010. The vouchers in respect of payment of the said dues were filed. However, in the absence of assessee having clarified the nature of expenses and the payments having been made to the labour classes and in the absence of assessee producing the said persons for verification, the Assessing Officer held the expenditure to be not genuine and added sum of Rs. 1,50,000/- to the total income of the assessee.

5. The CIT(A) after considering the factual aspects and proceeding before the Assessing Officer and the fact that the payment to M/s. R.K. Ispat was outstanding for substantial period, noted the plea of the assessee that since the material supplied by M/s. R.K. Ispat was not found to be of requisite standard by the contractee, the payment to the said party was delayed. The assessee further claimed that he shall be in a position to make the payment to M/s. R.K. Ispat after receipt of outstanding payment from MSEDCL in April, 2012. The CIT(A) vide para 5.4 observed as under:—

“5.4 In respect of the allegation of the A.O. that the purchases of Rs. 43,62,275/- are bogus, the appellant has pointed out that the work executed by the appellant could not have been executed in the absence of the said material. The appellant has also explained in his written submission as to how the material purchased by him has been utilized at various sites stating the date of purchase, quantity purchased, nature of goods and utilization of goods with quantity at various sites. The appellant has also pointed out the actual utilization of the goods purchased from M/s R.K. Ispat with the help of work orders and material required to execute the work as per detailed work orders specifying the quantity of material required for work to be executed at each site. On verification of the material available, the contention of the appellant is found to be correct.”

6. The CIT(A) also agreed with the contention of the assessee that in case the alleged bogus purchases were not considered, then net profit percentage would substantially increase. In view thereof, the CIT(A) deleted the addition holding that the Assessing Officer was not justified in treating the purchases as bogus. In respect of second addition of Rs. 1,50,000/-, the CIT(A) allowed the claim of assessee of commission payment since the amount in respect of the same was paid in the succeeding year, in respect of which the assessee had produced the vouchers. Further, the payment was made in the subsequent year after realization of consideration in respect of work performed.

7. The Revenue is in appeal against aforesaid deletion of two additions of Rs. 43,62,275/- and Rs. 1,50,000/-.

8. The learned Authorized Representative for the assessee pointed out that before the Assessing Officer, the assessee had furnished copies of bills, but the Assessing Officer had disallowed the claim as the assessee had failed to produce the evidence of delivery of the said goods and also because no payment was made to the said party. In this regard, the learned Authorized Representative for the assessee submitted that since the quality of goods was not good, hence the said payment was not made. He further stated that before the CIT(A), summary of utilization of goods was filed and the CIT(A) has deleted the additions.

9. The learned Departmental Representative for the Revenue on the other hand, pointed out that the issue raised in the present appeal is of bogus purchases is clearly covered by the order of Tribunal in Shri Mukeshkumar Pukhraj Mehta v. ITO in ITA No. 2026/PN/2014, relating to assessment year 2010-11, order dated 03.11.2015. Further, the learned Departmental Representative for the Revenue placed reliance on the ratio laid down by Pune Bench of Tribunal in Kolte Patil Developers Ltd. v. DCIT in ITA Nos. 1411 to 1415/PN/2013, relating to assessment years 2003-04, 2005-06 & 2007-08 to 2009-10 and in DCIT v. Kolte Patil Developers Ltd. in ITA Nos. 1478 to 1483/PN/2013, relating to assessment years 2004-05 to 2009-10, order dated 20.02.2015

10. We have heard the rival contentions and perused the record. The first issue arising in the present appeal is with regard to purchases made by the assessee totaling Rs. 43,62,275/- from a concern named M/s. R.K. Ispat. The assessee admittedly, for the year under consideration had booked the said expenditure on account of purchases made from the said concern. The Assessing Officer noted that the assessee had made the aforesaid purchases during the year, but the said amount was outstanding till close of the year and even till date of last hearing of the said assessment. The assessee was asked to produce confirmation, copy of account from the said party and also to produce the said party since the notice issued by the Assessing Officer was returned back ‘undelivered’. The Assessing Officer also requisitioned the assessee to produce the evidence of delivery of the said goods to different sites of the assessee. The assessee was unable to comply with the directions of Assessing Officer and claimed that the material purchased by it was delivered directly to the respective sites, where it was utilized and he was not in a position to file the requisite details of delivery/transportation. With regard to non-payment, the assessee claimed different explanations, one of the explanations that the material supplied by the said party was not up to the mark and further, the payment to the said party would be made on realization of payments from MSEDCL in April, 2012.

11. The case before us is a case of bogus purchases made by the assessee. Before the CIT(A), the assessee claims that it had utilized the said material and summary of utilization was filed which is placed at page 4 of the Paper Book. First of all, the said summary filed by the assessee of utilization of purchases at different sites is unsupported by any evidence of delivery of goods at the respective sites. Further, the assessee has not maintained any register with regard to its complete purchases and admittedly, the total details of utilization of raw material have not been filed. In the absence of the same, the question arising before us is whether the plea raised by the assessee could be accepted. Another claim of the assessee is that in case these purchases are ignored, then the profit declared by the assessee would be very high.

12. We find that similar issue of bogus purchases arose before Pune Bench of Tribunal in Shri Mukeshkumar Pukhraj Mehta v. ITO (supra) and also in Kolte Patil Developers Ltd. v. DCIT (supra). The Tribunal in Shri Mukeshkumar Pukhraj Mehta v. ITO (supra) held as under:—

“10. We have heard the rival contentions and perused the record. The assessee for the year under consideration was engaged in the business of trading in hardware and fittings. The total turnover declared by the assessee for the year was Rs. 1.98 crores. The assessee had declared gross profit of Rs. 28,95,578/- in the trading account, in turn declaring GP rate at 14.58%. There was information with the Assessing Officer that some of the parties from whom the assessee had made the purchases were named in the list of hawala dealers published by the Sales Tax Department. The total purchases from the said parties worked out to Rs. 74,73,020/- as per the list at page 2 of the assessment order. All the above said parties from whom purchases were made were located in Mumbai i.e. outside the area of operation of the assessee in Bhosari, Pune. The case of the Sales Tax Department against the said parties was that they were providing accommodation entries and though there was a TIN number allotted to each of them, but they had not paid any VAT alleged to have been collected from the respective persons to whom sales had been made. The assessee was one such person to whom the sales were made by the said parties who were enlisted by the Sales Tax Department. The Sales Tax Department also found that the said parties were not available at the given addresses and hence, these were treated as hawala dealers. The Assessing Officer during the course of assessment proceedings after noting that the assessee had made the purchases from the said hawala dealers, had asked the assessee to produce the said parties for verification. In addition, the Assessing Officer also requisitioned the assessee to produce the supporting bills along with related details i.e. delivery challans for the goods, receipts from octroi paid in respect of goods alleged to have been purchased from the above said parties. In reply, the assessee expressed his inability to produce the parties. He further stated that he was not in a position to produce any octroi receipts or any other corroborative evidence in support of the purchases alleged to have been made from the said parties. In view thereof, where the assessee was not in a position to produce any corroborative evidence to support the alleged purchases made from the said parties, the Assessing Officer show caused the assessee that since the parties were blacklisted by the Sales Tax Department as hawala dealers, the purchases alleged to have been made from them would be treated as bogus and not genuine purchases. The said show cause notice issued by the Assessing Officer was vide order sheet entry dated 04.03.2013 as to why the alleged purchases made from the said parties totalling Rs. 74,73,020/- should not be disallowed and added to his total income. Sufficient opportunity was given to the assessee and the learned Authorized Representative for the assessee in turn, stated that since the parties are included in the list of hawala dealers, the amount of purchases claimed from the said parties may be added to the total income of the assessee. The Assessing Officer accordingly, disallowed the alleged purchases of Rs. 74,73,020/- and added to the total income of the assessee, treating the same as bogus purchases. Since the assessee furnished inaccurate particulars of income and also concealed the particulars of income, penalty proceedings under section 271(1)(c) of the Act were separately initiated by the Assessing Officer.

11. In the facts and circumstances of the present case, when the assessee at first instance was confronted by the Assessing Officer to prove the genuineness of its purchases made from the parties, who were listed as bogus parties by the Sales Tax Department for non-payment of VAT, the assessee showed his inability to produce the said parties. Further, no confirmation was filed by the assessee to prove that it had made the purchases from the said parties. The parties were based in Mumbai and the assessee was based in Pune, had made purchases from Mumbai parties and the assessee was asked to produce any corroborative evidence of movement of goods from Mumbai to Pune. The assessee was asked to produce octroi receipts and/or any other corroborative evidence in support to the movement of goods. However, the assessee categorically before the Assessing Officer admitted that he was not in a position to produce any of the above.

12. Before the CIT(A), the assessee though had first admitted that the purchases should be added as its income, changed its stand that the entire purchases could not be disallowed as bogus, once it was held that the sales were genuinely effected. The case of the assessee before the CIT(A) and even before us is that the said purchases could not be disallowed on the basis of matching principles. Another plea raised by the assessee in this regard was that one of the parties i.e. M/s. Sidhivinayak Enterprises, Mumbai from whom purchases of Rs. 12,73,892/- had been made were not found in the list of hawala dealers. The assessee in this regard submitted that if most of the purchases are unverifiable, at best reasonable GP rate could be applied to make the addition in the hands of assessee and the entire purchase could not be disallowed.

13. The onus is upon the assessee to establish the entries passed in the books of account by first proving that the transaction entered into is genuine, incurred for the purpose of business and also by establishing its case by way of corroborative evidence. In cases, where the assessee claims that it has made purchases from various parties, just because the purchases are evidenced by purchase bills are not sufficient evidence to establish the genuineness of the transaction, especially in a case, where there is evidence with the Assessing Officer that the transaction entered into by the assessee is bogus. As referred to by us in the paras hereinabove, the parties from whom the assessee had made the purchases were blacklisted by the Sales Tax Department on the fact that they had entered into accommodation entries of providing the bills without transfer of goods, on which though VAT was collected but was not deposited with the Sales Tax Department. Further, the said parties were not found at their addresses. The CESTAT has confirmed that the said parties were hawala dealers, wherein the seller had collected the tax but had not paid to the Sales Tax Department. The said fact had been brought to the notice by the learned Authorized Representative for the assessee. The assessee in this regard wants to point out that VAT was collected from it and once the assessee has paid VAT, then the purchases stand regularized. Merely because the assessee is able to produce the purchase bills evidencing the VAT charged to the assessee, does not establish the factum of purchases being made by the assessee, which items in turn, were sold by the assessee. The assessee is engaged in the business of trading in hardware and fittings under the name and style of M/s. Arihant Tubes Fittings i.e. the assessee claimed to have made the purchases from certain parties, which in turn, were sold by the assessee. However, the assessee is unable to produce any evidence with regard to the movement of goods i.e. any supporting documents showing the transport of goods from the parties at Mumbai to the assessee's premises at Bhosari, Pune. Despite the Assessing Officer and the CIT(A) having given ample opportunity to the assessee to produce the confirmation of purchases by way of transport receipts, weigh bridge receipts, octroi receipts, etc., the assessee has not produced any evidence. On the other hand, when all these facts were confronted to the learned Authorized Representative for the assessee by the Assessing Officer and show caused by way of an order sheet notice, also issued to the learned Authorized Representative for the assessee, he admitted that the alleged purchases made from the hawala dealers should be treated as income. At no point of time during the course of assessment proceedings, the assessee raised the plea of matching principles, under which it claimed that there was tally between the purchases and sales and also the closing stock shown by it. Only before the CIT(A), the concept of matching principles was raised, but in the absence of any details whatsoever, the CIT(A) vide para 10 has given a finding that Even at this stage, the appellant is not in position to discharge the onus cast upon him by producing the parties, their confirmations, transport details, weigh bridge and octroi receipts, etc. to support his case so that remand order u/s. 250(4) of Income-tax Act can be passed, and in view of thereof, the plea of the assessee regarding matching principles was dismissed by the CIT(A).

14. The learned Authorized Representative for the assessee filed before us a voluminous compilation of data, which was headed as the charts showing details of purchases effected from so called Hawala Parties and corresponding sales turned out from such purchases also quantity—wise (Party-wise), as under:—

1) M/s. Phoenix Steels

2) M/s. K.G. Sales Corproation

3) M/s. Siddhivinayak Enterprises

4) M/s. James Steel Alloys P. Ltd.,

5) M/s. Asian Metal Industries

6) M/s. Marda Steel Trade P. Ltd.

7) M/s. Excel Industrial Corporation

8) M/s. Virgo Valve Controls Ltd.,

9) M/s. Suraj Steel India

10) M/s. Ashtavinayak Sales Agency

11) M/s. Dhiren Mercantile Pvt. Ltd.

12) M/s. Ashtavinayak Sales Agency.

15. The assessee has furnished the said information in respect of 12 parties from whom the alleged purchases have been made. Along with the said compilation of 130 pages, the assessee gave a Certificate that no new evidence has been included, which was not placed before lower authorities. It is further certified that only from the available sales and purchase bills and the charts have been prepared and produced in this Paper Book indicating the quantity and other details of material purchased and quantitywise sales turned out from such branded as Hawala Purchases. When confronted, the learned Authorized Representative for the assessee fairly admitted that the enclosed tabulated details were not filed either before the Assessing Officer or CIT(A), but the exercise of re-conciliation has been made now. The perusal of data compiled in that Paper Book reflects similar items similarly named having been claimed to have dealt by the assessee. However, the assessee had not maintained any stock details and in the absence of complete stock details of purchases, sales, opening and closing stock being made by the assessee and in the absence of any evidence having been filed by the assessee to establish the movement of goods, mere re-conciliation of purchases with the sales on a particular date, has no evidentiary value. The assessee is unable to establish that the goods purchased by it were sold to a particular person on the given date. No reliance can be placed on such chart prepared by the assessee, which admittedly was prepared from the available sales and purchase bills. The onus is upon the assessee that the items which it claims to have purchased should have reached him and thereafter, the same should have been transported to the respective parties to whom the sales have been made. However, the assessee has not produced any evidence in this regard and in the absence of the same and also in the absence of any stock details being maintained by the assessee, the alleged re-conciliation exercise has no basis and cannot be relied on to establish the case of the assessee on matching principles. Another aspect to be kept in mind is that the Assessing Officer had further confronted the assessee with the valuation of closing stock at the end of the year. During the course of assessment proceedings, the Assessing Officer found the assessee had not maintained any day-to-day stock register and was of the view that the valuation of stock could not be verified. When confronted on the said issue, the learned Authorized Representative for the assessee submitted that due to large number of items involved, it was not practical to maintain the stock register. As against the same, now the case of the assessee before us is that it is in a position to reconcile the purchases made from hawala dealers with the sales made by it to different parties. However, in the absence of any day-to-day stock register being maintained by the assessee, we find no merit in the said plea of the assessee. The CIT(A) while deciding the case of the assessee has further gone on the issue that without prejudice even where it has accepted that the corresponding purchases were entered into books of account of the assessee, but the presumption would be that the purchases were made from alternate sources. The purchases made from alternate sources corresponding to the bogus purchases were treated as unexplained expenditure under section 69C of the Act. We find that similar issue has been decided by the Hon'ble Delhi High Court in CIT v. LAMEDICA (supra) and the Hon'ble Madhya Pradesh High Court in System India Castings v. Commissioner Of Income-Tax (supra).

16. On the other hand, the learned Authorized Representative for the assessee before us has placed reliance on series of decisions for the proposition that where the sales have been accepted in the hands of assessee, then only a suitable percentage of the purchases are to be disallowed. The first such reliance was on the decision of Mumbai Bench of Tribunal in Bassein Drugs Ltd. v. ITO (supra). Even before the CIT(A), the learned Authorized Representative for the assessee placed reliance on the said decision. The facts of the said case are at a different footing, wherein complete details and documents were filed on record, on the basis of which the conclusion of CIT(A) was that the alleged purchases had been used in the manufacturing of drugs and therefore, the quantity of such drugs could not be doubted. However, in the facts of the present case before us, during the course of assessment proceedings, the assessee himself admitted that the entire purchases may be added in his hands as it was made from the bogus parties. On a later date, before the CIT(A), he for the first time raised the principle of matching concept, but does not furnish any details. Before us, he claims all the bills were filed with him, under which, he has tried to match the purchases effected from the hawala dealers to the corresponding sales, but no other evidence of how he has matched the two is brought on record. The assessee is trading in the said goods from day to day and it is the case of the assessee that the items purchased from the hawala dealers are the only purchases made of the said items. Where the assessee has not maintained the stock register, which could establish datewise inflow of goods from different parties, which in turn, were sold by him to different parties on datewise, the assessee claims that he has reconciled the purchases and sales. In the absence of the said details being maintained by the assessee, the exercise of picking up of one item and matching with the another item of sales, around the same date, the data of purchases cannot be verified by any of the authorities as the assessee is a trader in the goods. He was not a manufacturer of items, wherein some kind of exercise would be established that certain items were utilized to give the desired manufactured results. In case of trading, where no quantity-wise or amount-wise or date-wise purchases have been maintained by the assessee to reconcile that a particular item purchased on a particular date, had been sold by the assessee to a particular person on a particular date, it is not only difficult, but impossible to match the purchases and sales. Even in accounting principles, it is recognized that where the assessee is a trader, then at best FIFO method or LIFO method may be applied i.e. First In First Out and Last In First Out to match the movement of goods. The accounting principles provided that the assessee can maintain the quantity-wise or bill-wise and date-wise details of the items purchased by it. But in the absence of any such details being maintained by the assessee and in view of the various items dealt in by the assessee, we find no reliance of the data submitted before us, which in any case was not submitted before any of the authorities though before the CIT(A), the issue of matching concept was raised. The CIT(A) has given a finding that even at the appellate stage, the assessee is not in a position to discharge his onus. Further, in order to prove the sanctity of the purchases, the basic details of octroi receipts, transportation bills, delivery challans, etc. were not available with the assessee and the assessee has admitted to the same before both the authorities below. In the above said facts and circumstances, there is no alternative, but to treat the purchases made by the assessee as bogus and the expenditure incurred by the assessee, thus, merits addition in the hands of assessee. We further place reliance on the ratios laid down by the Hon'ble Delhi High Court in CIT v. LAMEDICA (supra) and the Hon'ble Madhya Pradesh High Court in System India Castings v. Commissioner Of Income-Tax (supra).

17. The learned Authorized Representative for the assessee before us has placed reliance on the ratio laid down by the Hon'ble Bombay High Court in the case of CIT v. Nikunj Eximp Enterprises Pvt. Ltd. (supra). In the facts of the case before the Hon'ble Bombay High Court, the addition on account of bogus purchases made by the Assessing Officer and upheld by the CIT(A), was deleted by the Tribunal, in view of the following factual positions:—

(i) Letters of confirmation from suppliers were filed

(ii) Copies of Bank statement showing entries of payment through A/c payee cheques to the suppliers.

(iii) Stock statements with complete details of opening stock, purchases, sales and closing stock were filed.

(iv) Substantial amount of sales were made to the Government Departments like Defence Research and Development Laboratory, Hyderabad.

18. The Hon'ble Bombay High Court upheld the order of Tribunal, in view of the above factual aspects and further held that the disallowance made merely, the parties were not produced, cannot be upheld. However, in the facts of the present case as pointed out by us, the assessee has not maintained any stock details i.e. the details of opening stock, purchases, sales and closing stock, nor has he produced any evidence of the goods being delivered to him. Further, when he was confronted at the first stage by the Assessing Officer of the non-genuineness of the parties and the same being declared as bogus by the Sales Tax Department, the learned Authorized Representative for the assessee admitted before the Assessing Officer that the same may be treated as bogus and amount may be added in his hands. The onus is upon the assessee to establish that it had made the said purchases from the said parties. However, where the assessee has failed to discharge his onus and has made a statement before the Assessing Officer, then the retraction of such statement is possible only if the assessee files the relevant corroborative evidence to establish the transaction. In the absence of the assessee having established this transaction by way of corroborative evidence, mere exercise of matching some purchases with some sales, in the absence of any stock details being maintained by him from date to date, we find no merit in the stand of the assessee and the same is rejected. The exercise of matching principles has no basis and is futile exercise.

19. The learned Authorized Representative for the assessee placing reliance on various decisions as referred above, pointed out that in the absence of the Assessing Officer having been rejected the books of account, no addition could be made in the hands of assessee since the sales made by the assessee were established. We find no merit in the stand of the assessee in this regard since the disallowance in the hands of assessee is made on account of specific purchases being held to be bogus. Once the specific purchases are held to be bogus, then the addition is to be made to the extent of amount of such unverifiable and unsubstantiated purchases. The learned Authorized Representative for the assessee further placed reliance on series of decisions by different Benches of Tribunal and various Hon'ble High Courts in this regard, but in view of the peculiar facts of the case, where the assessee himself had admitted to the addition of bogus purchases from hawala dealers, when confronted by the Assessing Officer to furnish the corroborative evidence, the reliance placed is mis-placed since in the facts of all the other cases, there was no admission before the Assessing Officer. Hence, the ratios laid down by the different Benches are not applicable to the facts of the present case. In the totality of the above said facts and circumstances, we find no merit in the plea of the assessee in this regard and upholding the order of CIT(A), we dismiss the ground of appeal Nos. 1 to 4 raised by the assessee.

20. Another stand taken by the learned Authorized Representative for the assessee before us was that where the payments to the selling dealer were made by cheque, then in the absence of any evidence being available with the Assessing Officer to show that the cheques issued in favour of the selling dealers for purchases effected by them, have come back to the assessee, no addition could be made. As pointed out by us, in the facts of the present case, the assessee had admitted to the addition of the purchases made from the aforesaid parties before the Assessing Officer and in view thereof, no further verification was made by the Assessing Officer. Once the assessee had prevented the Assessing Officer from carrying on any exercise of any kind of verification, then on a later date, the assessee cannot take the stand that no such addition is warranted in the absence of any verification exercise carried out by the Assessing Officer. The assessee has failed to furnish the confirmation from the parties and the Sales Tax Department has not been able to trace the said parties. In the absence of any confirmation being filed by the said parties or the evidence of the bank statement of the said parties having been placed on record by the assessee to prove its case, merely because such view has been taken in any other decision, the same cannot be applied where the assessee has not discharged its onus. Even before us, the assessee has not furnished any evidence of payment except for making the statement that the amounts were paid by way of cheques. In view thereof, we find no merit in the said stand of the assessee. Upholding the order of CIT(A), we dismiss the ground of appeal Nos. 1 to 4.”

13. Further, the Tribunal in Kolte Patil Developers Ltd. v. DCIT (supra) also upheld the similar addition made on account of unaccounted purchases. While deciding the appeal, the second issue of consumption of raw material at the respective sites undertaken by the assessee was also considered and it was held as under:—

“26. Before parting on this issue, we may also touch-upon an alternate plea raised by the assessee with regard to the quantum of addition on this count. In this context, assessee pointed out that if the entire amount of purchase debited in the Profit & Loss Account with respect to the six parties is disallowed, it would mean that the corresponding consumption of steel has not taken place in quantitative terms. Before the lower authorities, assessee had furnished a working, which was confirmed by a structural engineer regarding the minimum requirement of steel in the projects undertaken by the assessee. As per the said working, if the aforesaid disputed quantity of steel purchase was excluded, it would show that the consumed quantity of steel was lower than the minimum required to undertake construction. Therefore, according to the assessee, the only presumption that can be withdrawn is that assessee had indeed effected the purchases. It was pointed out that on the failure of the assessee to substantiate the purchases, at best, the addition can be made with respect to the gross profit element corresponding to the amount of purchases but not the entire amount of purchase bills. The reliance has also been placed on certain decisions in this regard, which we have noted in earlier paras.

27. We have carefully considered the aforesaid alternate plea of the assessee but find ourselves unable to accept the same, having regard to the facts and circumstances of the present case. The proposition being relied upon by the assessee on the strength of the decisions of the Hon'ble Gujarat High Court noted earlier is not disputed. But the moot question is as to whether the position canvassed by the assessee that the quantity of steel corresponding to the impugned purchases has been consumed stands established or not? The confirmation of the structural engineer, a copy of which has been placed in Paper Book at page 79 does not elaborate as to the time period in which the consumption of steel has taken place. Moreover, at the relevant point of time, multiple projects of the assessee were under construction and there is no material to co-relate as to whether at the time when the impugned purchases were effected any projects were being carried out. Therefore, the ratio of the judgements of the Hon'ble Gujarat High Court in the case of (i) Bholanath Poly Fab Pvt. Ltd. (supra); and, (ii) Sanjay Oilcake Industries (supra) cannot be applied in the present case. Therefore, the action of the CIT(A) in holding the purchases effected from six parties as bogus is affirmed.”

14. In the totality of the above said facts and circumstances and the issue being covered by the orders of Pune Bench of Tribunal, we reverse the order of CIT(A) and uphold the addition made by the Assessing Officer on account of bogus purchases totaling Rs. 43,62,275/-. The grounds of appeal raised by the Revenue in this regard are allowed.

15. Now, coming to the second issue raised in the present appeal is commission payment of Rs. 1,50,000/-.

16. The said amount was added as income of the assessee on the surmise that it was due as on close of the year. The assessee has furnished before the CIT(A) and also before the Assessing Officer sufficient evidence to prove that the liability of Rs. 1,50,000/- has been discharged in the succeeding year. In the totality of the above said facts and circumstances, where the amount of commission is claimed to have been paid after realization of the amount due to the assessee by the said commission agent, we find no merit in the grounds of appeal raised by the Revenue and the same are dismissed. The grounds of appeal raised by the Revenue are partly allowed.

17. In the result, the appeal of the Revenue is partly allowed.