TaxTMI 
TaxTMI 
2017 (11) TMI 1598
X X X X Extracts X X X X
X X X X Extracts X X X X
....ircumstances of the case, the Ld. CIT(A) erred in directing that 12.5% of the bogus purchases be disallowed as the profits suppressed instead of disallowing the bogus purchases u/s. 69C of the Income-tax Act, 1961. 1(b) On the facts and in the circumstances of the case, Ld. CIT(A) ought to have confirmed the addition of Rs. 2,14,49,808/- made u/s 69C of the Income Tax Act, 1961 being the bogus purchases made from the fiver Hawala dealers. 2. The appellant prays that the order of the Ld. CIT(A) be set aside and the order of the AO be restored. 3. The appellant craves leave to amend or alter any ground or add any other ground which may be necessary. 3. The grounds taken by assessee are as under:- 1) (a) The learned CIT(A) erred i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the above grounds of appeal. 4. Rival contentions have been heard and record perused. 5. The facts of the case, in brief, are that the assessee is a company engaged in the business of Trading & Manufacturing in Ferrous & Non Ferrous Metal. It furnished its return of income for A.Y. 2011-12 on 30/09/2011 declaring total income of Rs. 14,51,200/-. The case was reopened by issuing notice u/s 148 dated 11/03/2013 which was duly served upon the assessee. The AO completed reassessment u/s 143(3) r.w.s.147 of Act determining total income at Rs. 2,30,01,010/- on 10/03/2014 by making the adjustments. Aggrieved, the assessee has filed the appeal before CIT(A). 6. By the impugned order, CIT(A) restricted the addition to the extent of 12.5%. However....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rchases, corresponding sales and closing stock - Submission dated 21.01.2014 (Pg, No. 97 to 101 of PB) c. Records maintained for receipt and dispatch of goods - In tally software - Submission dated 21.01.2014 (Pg. No. 97 to 101 of PB) d. Consumption and production of goods - Not applicable as these are traded goods; e. TIN and PAN of each party from whom purchases have been made - TIN provided in submission dated 10.03.2014 (Pg. No, 221 to 222 of PB) f. Copies of accounts- Submission dated 21.01.2014 (Pg. Nos, 47, 66, 82, 89 and 94 of PB); g. Documents relating to transportation and receipt of goods - Submission dated 21.01.2014 include copies of delivery challan (Pg. No, 47 to 96 of PB); h. Copy of bank statements - Submission ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on the decision in the case of CIT v. Nikunj Eximp Enterprises (P.) Ltd. [2015] 372 ITR 619 (Bom.) and 15. Even, the Id, Assessing Officer and CIT(A) has failed to prove that the assessee has shown lesser profits by virtue of these alleged purchases to avoid tax consequences. In this regard, it may please be noted that the average Gross Profit for the last 5 years is 3.65% and average Gross Profit of subsequent 3 years from A.Y, 2012-13 to 2014-15 (all assessed u/s. 143(3) of the Act) is 5.87%, whereas the current Gross Profit offered by the assessee in the year under consideration is 8.15%. 16. Without prejudice to the above, addition if any should be restricted to 2% of the alleged bogus purchases. In this regard, reliance is placed on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcumstances, the CIT(A) concluded that only profit element attributable to such bogus purchases is required to be added. Reliance was placed by CIT(A) on the decision of Gujarat High Court, wherein 10% was proposed to be added on account of VAT and 2.5% on account of profit. It was contention of learned AR that rate of VAT in Gujarat was 10% whereas in Maharashtra it is only 4%, which also has been recovered by the department from the assessee. With regard to the estimation of profit at 2.5%, it was contention of learned AR that profit rate offered by the assessee during the year under consideration at 8.15% is much better than the profit rate declared in the earlier five years as well as in the subsequent three years wherein assessment has....