2017 (3) TMI 811

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....appeal of assessee is against the order of CIT(A) against restricting the disallowance of 12.50% of bogus purchases being estimated profit rate. For this assessee has raised following 2 grounds: - "1. IST appellate authority erred in disallowing 12.50% of the purchases made from the parties whose names are appearing in the list of suspicious dealers on the website of the Maharashtra Sales Tax Department. 2. IST appellate authority erred in applying the case laws of Sanket Steel Traders of the Ahemdabad Tribunal without considering the fact that recently Mumbai Income Tax Appellate Tribunal has in the case law of Ganpatraj A Snaghavi V/s ACIT and DOT V/s Rajeev G. Kalathil has decided that purchases made from the parties whose names ar....

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....arty available from whom the assessee made purchase or even the transporters were not available. Hence, he treated these bogus purchases of Rs. 3,48,41,491/- as bogus purchases and made disallowance of 25% of these bogus 5. Purchases as profit amounting to Rs. 87,10,372/-. Aggrieved assessee preferred the appeal before CIT(A), who following the case law of Ahmedabad Bench ITAT decision in the case of Vijay proteins Ltd. 58 LTD 428 (Ahd Trib) restricting disallowance at 12.5% of the bogus purchases as against estimated by the AO at 25% by observing as under: - "In the case of Sanket Steel Traders vs. ITO -5(1), Vadodra, ITA No.2801/Ahd/2008 for the A.Y. 2004-05 dated 20th May, 2011, the facts of the case were that the assessee derived ....

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..... So for as the bogus purchase is concerned, we find that the Assessing Officer recorded the detailed finding so as to establish that the purchases claimed to have been made from Girnar Sales Corporation and Shiv Metal Corporation was bogus. The learned counsel for the assessee was unable to controvert the factual finding recorded by the AO in this regard. However, there is no dispute that the assessee is only a trader in the it-on and steel and it has maintained quantitative details. The statement made by the learned counsel that the purchases claimed to have bee made by the assessee from Girnar Sales Corporation and Shiv Metal Corporation is duly recorded in the books of the assessee and has been reflected either in the sales or in the cl....

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....steel (supra), the ITAT deemed it fit to sustain the disallowance for a lumpsum amount of Rs. 50,0001-. However, we find that in the case of Shri Anubhai Shivial (supra) the /TAT has considered both the decisions in L,,ecase of Vijay Proteins and Surteel (supra) and thereafter sustained the disallowance at 12.5%. Relevant findings of the ITAT in the case of Anubhai Shivalal reads are under: 3. At the time of hearing before us, it is submitted by the learned counsel that the addition sustained is excessive. In support of this contention he referred to the decision of the Tribunal in the case of /TO Vs. Sun Steel 92 TTJ (Ahd) 1126 wherein the Tribunal has sustained the addition of Rs. 50,0001- on account of bogus purchases. However, ....

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....see's case. We, therefore, do not find any justification to interfere with the order of the CIT(A) in this regard. The some is sustained." After considering the facts and the arguments of both the sides, we are of the opinion that it would meet ends of justice, if the disallowance is sustained at 12.5% of the purchase from these two parties. The Assessing Officer is directed to work out the disallowance accordingly. Since the facts of the assessee's case are identical, we respectfully following the above decision of the 1TAT, direct the Assessing Officer to disallow 12.5% of the purchases made during the year under consideration. 2.12 Considering the totality of the facts and circumstances; as also the decisio....