TaxTMI 
TaxTMI 
2017 (8) TMI 847
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....d together and are disposed of by this common order. 2. The brief facts of the case are that the assessee is a legal heir of late Shri Krishnakangt T Buch, engaged in the business of trading in ferrous and non ferrous metals. The return of income for the assessment year 2009-10 was filed on 25-09-2009 declaring total income of Rs. 2,87,970. Subsequently information received from DGIT (Investigation) revealed that the assessee has made purchases from certain parties, who were listed in the list prepared by Maharashtra Sales-tax Department as hawala operators involved in providing bogus bills without delivery of goods. Therefore, based on the information, the AO had reason to believe that income chargeable to tax has escaped assessment and....
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....e further submitted that purchases from those parties are genuine in nature, which are supported by bills and also payment has been made by cheque. The AO merely because the parties did not respond to the notices issued u/s 133(6) has come to the conclusion that these parties are hawala operators without providing an opportunity to cross examination thereby violated principles of natural justice. The assessee further submitted that the AO neither pointed out any irregularities in books of account nor has disputed sales declared by the assessee. In the absence of any incorrectness in the books of account and stock details, addition cannot be made merely on the basis of information received from third parties, more so, in the back of the asse....
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....ence, these grounds raised by the assessee are dismissed, as not pressed. Thus, the effective ground remains for our consideration from both the appeals is addition towards bogus purchases u/s 69C of the Act. 6. We have heard both the parties and considered materials available on record. The AO made additions towards bogus purchases on the basis of information received from Investigation Wing of Income-tax Department which stated that the purchases from certain parties who are involved in providing accommodation entries without actual delivery of goods. The AO observed that the assessee has made purchases from certain parties, who appeared in the list prepared by Maharashtra Sales-tax department and hence, he opined that purchases from t....
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....upon it to prove the purchases with necessary evidence. The AO further was of the opinion that although assessee has furnished certain evidence in the form of purchase bills and payment details failed to rebut the allegations made in the backdrop of observations of Sales-tax department which found that the said parties were involved in providing accommodation entries without actual delivery of goods. Therefore, he opined that purchases from above parties are bogus in nature and hence, made addition u/s 69C of the Act. The contention of the assessee is that merely because parties have not responded to the notice, addition cannot be made towards purchases, which are supported by various documents. The assessee further contended that the AO ha....
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....er up the purchases. Therefore, under these facts and circumstances, what needs to be taxed is only the profit element embedded in such purchases, but not the entire purchases from these parties. 11. Having said so, let us examine what is reasonable profit in case of these transactions. Various Courts and Tribunals upheld estimation of net profit ranging from 12.5% to 25% depending upon facts and circumstances of each case. The Hon'ble Gujarat High Court in the case of Vijay Proteins Ltd vs ACIT (1996) 58 ITD 428 (Guj), under similar set of facts, has upheld estimation of net profit of 15% on bogus purchases. No uniform yardsticks could be applied to estimate net profit because various of various nature of risk involved in various ....