AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (9) TMI 1218
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....ddition on account of bogus purchases. All the appeals were heard together and are being disposed of by this common order for the sake of convenience. 2. A perusal of record reveals that the appeals by the assessee have been filed beyond six days of the prescribed period of limitation. The assessee has filed application for condonation of delay. The application is supported with the affidavit of Shri Rajesh Kumbhar, who is working as Accounts Manager in the assessee company. In the affidavit, the deponent has stated that the orders of the CIT(A) for A.Ys. 2006-07, 2007-08, 2008-09 and 2009-10 were received on 30.01.2015. The copy of the orders was sent to their counsel and Chartered Accountant for advice. The counsel advised them to file a....
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....rred in confirming the disallowance of deduction of bad debts of Rs. 7,12,7667-, u/s. 36(1)(iii) of the Act. 5) The appellant craves leave to add, alter, amend, modify any grounds of appeal." 5. The brief facts of the case are that the assessee filed its return of income for the relevant assessment year on 30.11.2006, declaring income of Rs. 1,22,78,606/-. The return was processed u/s. 143(1) on 04.10.2007 at an income of Rs. 1,22,78,610/-. Subsequently, the assessment was re-opened on the basis of information received from the Sales Tax Department through DGIT (Investigation) that the assessee has bogus purchases from Bhavika Enterprises, Sahyog Enterprises and Supreme Enterprises. The assessee was served with notice, dated 22.03.2013....
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....rd party information without making any independent inquiry. The learned CIT(A) sustained 100% disallowance made by the Assessing Officer on account of alleged bogus purchases, which is unreasonable. The lower authorities have not rejected the books of account or the sales of the assessee. The learned DR, on the other hand, argued that the investigation wing of the department made full fledge inquiry. The parties from whom the assessee has shown purchases were hawala dealers. The name of three concerns from whom the assessee has shown purchases are shown in the list of hawala dealers. Thus the dealers were engaged in providing accommodation entries without delivery of any material or goods. The assessee obtained accommodating bills to show ....
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.... reduce profit. On the basis of above observation, the learned CIT(A) concluded that the assessee failed to explain the genuineness of the purchases. The learned CIT(A) also examined the working of peak for the relevant period and confirmed the entire disallowance. We have noted that no independent inquiry was made by the lower authorities. The lower authorities made addition of 100% of the purchases made from all the three parties. In our view, the addition was made on the basis of third party information. Under the Income Tax Act, Income Tax Authorities are entitled to tax the real income. Even if the transactions is not verifiable the only taxable amount is the taxable income component therein and not the entire transactions. We are of t....
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....eciding the issue afresh in accordance with law. 10. In the result, appeal in ITA No. 1936/Mum/2015 for A.Y. 2006-07 is partly allowed. 11. ITA No.1937/Mum/2015 for A.Y. 2007-08 The assessee has raised identical grounds as in A.Y. 2006-07. We noted that the Assessing Officer, for the year under appeal also, disallowed 100% of the purchases from all the three parties, who were involved in A.Y. 2006-07. The disallowance so made was Rs. 52,55,518/-. On appeal, the CIT(A) sustained the addition to the extent of Rs. 44,71,886/- on the basis of peak credit. We have noted that the disallowance sustained by the CIT(A) is about 85% of the alleged bogus purchase. Considering the fact that we have restricted similar addition @12.5% for A.Y. 2006-07....
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....cy, we direct the Assessing Officer to restrict the disallowance to 12.5% (12.5% of Rs. 50,17,870/-) Appeal is partly allowed. 14. Now coming to the Revenue's appeal in ITA No. 1976/Mum/2015 for A.Y. 2008-09 (i) The Learned CIT(A) has erred on facts and in law, in allowing the assesse the benefit of peak without appreciating that this being a case of utter disregard and subversion of law, the burden of proof (required for claiming benefit of peak) cast on the assesse was of a very high degree and assesse failed to discharge this burden. (ii) The Learned CIT (A) has erred on facts and in law, in not appreciating that for proof of purchase debited in assessee's books of accounts, absolute burden of proof is cast on the assesse and ....