TaxTMI 
TaxTMI 
2017 (7) TMI 101
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.... 1. "Learned CIT(Appeal) erred in confirming the profit element to 12.5% and further, reducing the GP declared in the said assessment year and erred in treating the same as bogus purchase.. 2. Learned CIT(Appeal) erred in ignoring the detailed evidences brought on record and ignoring the judicial precedents brought to his knowledge. 3. Learned assessing officer erred in rejecting the books of account on surmises and conjecture basis and Learned CIT(Appeal) erred in confirming the same." 2. In this case, it was noted by the AO that assessee had made purchases from following five parties, whose names have been identified by the Investigation Wing of sales-tax department as bogus suppliers / bogus dealers: S.No. Na....
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....he assessee has been considered at length and the claim of the assessee that these transactions of purchase from the above parties are genuine is not acceptable for the following reasons: * The primary onus is casted on the assessee to establish the genuineness of purchases claimed by him. As per section 101, 102 and 106 of the Indian Evidence Act, the onus lies upon the assessee to prove all expenses, including purchases to the satisfaction of AO. In the instant case, the assessee is obliged to discharge this onus. Further, he failed to furnish confirmations from the alleged suppliers and also failed to produce these parties for examination. * Mere filing ledger account and payment made through account payee cheque cannot....
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....r there is reasonable doubt on the books or book result of the assessee. The second, he has manipulated his purchases to the disadvantage of the Revenue as he pleases. He circumvented the provisions of 40A (3) and other sections of the Act to his advantage. Finally, assessee caused loss to Revenue by manipulating the purchases." 3. Finally, the AO rejected the books of account invoking the provisions of section 145(3) of the Act and observed that even if it is accepted that corresponding sales have been made, even then, the entire amount of purchases cannot be allowed. Therefore, he made ad-hoc disallowance of Rs. 8,38,875/- out of total bogus purchases of Rs. 46,60,175/-. Being aggrieved, assessee filed appeal before Ld. CIT(A) and made....
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.... purchase @12.5%. 4. During the course of hearing before us, Ld. Counsel of the assessee vehemently assailed the addition sustained by the Ld. CIT(A). It was submitted by him that in this case, the department was not able to prove that the impugned purchase transaction was bogus. The assessee had been able to prove that goods purchased have been sold also. He placed reliance upon the decision of Delhi Bench of the Tribunal in the case of ACIT vs Mahesh Kumar Shah ITA No.5194/mum/2014 dated 31-01-2017. 5. We have gone through the orders passed by the lower authorities and copy of decision of the Tribunal placed before us. It is noted that Ld. CIT(A) reduced the amount of disallowance from 18% to 12.5% by observing as under:- "....
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....ase price accounted through fictitious invoices has to be disallowed. The Hon'ble High Court of Gujarat in the case of Sanjay Oil cakes v/s CIT 316 ITR 0274 dealt with similar case where some of the alleged suppliers who had issued bills to the assessee were not genuine as they were not traceable. The goods were received cram other parties. The likelihood of the purchase price being included could not be ruled out and therefore the Hon'ble High Court has upheld the decision of CIT(A) and the ITAT disallowing 25% of the payments made to such parties. The Hon'ble High Court of Gujarat in the case of CIT vs. Simit P. Sheth 356 ITR 0451 held that once the sale is accepted by the AO, the very basis of purchases could not be questione....