TaxTMI 
TaxTMI 
2017 (10) TMI 231
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....ring Nil income. The assessment was completed u/s 143(3) of the Act, on 25-03-2011 accepting the income returned by the assessee. Subsequently, the assessment was reopened by issue of notice u/s 148 of the Income-tax Act, 1961 for the reasons recorded which states that information gathered / available in the office revealed that the assessee has obtained bogus bills of Rs. 3,59,37,837 from entities, who were listed in the sales-tax department website declaring them as hawala dealers by the sales-tax department, Mumbai thereby inflating the expenses and suppressing the profits. In response to notice the assessee, vide letter dated 05-08-2014 submitted that return filed on 30-09-2009 may be treated as compliance to the notice u/s 148. The cas....
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....to the total income of the assessee. 4. Aggrieved by the assessment order, the assessee preferred appeal before CIT(A) and submitted that the AO was erred in estimating gross profit of 30.12% on alleged bogus purchase merely on the basis of list prepared by Maharashtra Sales-tax Department, despite furnishing of evidences to prove the purchases as genuine. The assessee further submitted that it had furnished necessary evidences in the form of purchase bills and payment proof for having paid the amount by cheque. The AO in the absence of any evidence of monies having flown back from the said parties, merely on the basis of suspicions and surmises estimated gross profit of 30.12% on the alleged hawala purchases. The assessee further submitte....
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....information received from the Investigation Wing clearly establishes that the assessee is the beneficiary of bogus purchase bills taken from hawala operators. Therefore, the AO has rightly made additions towards gross profit on alleged bogus purchases and his order should be upheld. 6. The Ld.AR for the assessee, on the other hand, submitted that the AO has made additions towards gross profit on alleged bogus purchases merely on the basis of information received from sales-tax department despite furnishing of evidences to prove the purchase. The assessee has filed necessary evidences to justify the purchases. However, the AO has ignored all the evidences to make additions purely on suspicion and surmises only on the ground that the parties....
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....t the AO has not only ignored the gross profit declared by the assessee which is higher than the gross profit declared in similar line of business, made further addition of 30.12% on alleged bogus purchases would certainly amount to estimating gross profit at 60.24% which is quite arbitrary and on higher side. 8. The AO has made addition towards bogus purchases which is supported by the list prepared by sales-tax department and information gathered during the course of assessment proceedings which clearly establishes that the parties are hawala operators involved in providing accommodation entries without actual delivery of goods. Therefore, there is no merit in the arguments of the assessee that purchases from the so-called parties are ge....
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....ee Ganesh Trading Co. The Ld.AR for the assessee submitted that this has been discussed by the CIT(A) in his order at para 5 and gave a categorical finding that in case of Shree Ganesh Trading Co, the actual transaction as per the ledger account filed before the AO has to be taken. We find force in the argument of the assessee for the reason that the AO has taken two lists of parties for the purpose of estimation of gross profit on bogus purchases. The name of Shree Ganesh Trading Co has appeared in both the lists. But for the reasons recorded for reopening of the assessment, total purchase from Shree Ganesh Trading Co is Rs. 1,62,66,830, however, the AO has taken two purchases from Shree Ganesh Trading Co. The assessee claims that he had f....