TaxTMI 
TaxTMI 
2017 (12) TMI 573
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....er: 1. Learned Assessing Officer erred in adding peak purchases of the total purchase value amounting of Rs. 19320247/- ignoring the detailed evidences brought on record and further erred in levying interest thereon and ignoring the judicial precedents brought to his knowledge. 2. Learned Assessing Officer erred in disallowing the purchases on the basis of information received from Sales Tax Authorities which contrary to the material fact on record and more particularly is contrary to the provisions of Section 69C since the source is in dispute and not the purchase expenditure. 3. In this case, the return of income was filed on 16.09.2009 declaring total income at Rs. 8,13,210/-. The Assessing Officer in the assessment ....
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....ements reflecting the payments made to these parties. No evidence of transportation of goods required by the Assessing Officer were furnished. The assessee further admitted that the concerned parties are not available at their last known addresses nor does he know the current whereabouts of the parties. The assessee confirmed that it has sold the goods which have been purchased from the alleged hawala dealers and has realized the sale proceeds. Therefore, it was pleaded that the purchases have to be treated as genuine. The Assessing Officer however, relying on the decision of the Hon'ble ITAT, Ahmedabad in the case of Vijay Proteins worked out the peak credit for the purchases made from the alleged hawala parties. The peak credit worked....
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....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 questioned. Not the entire purchase price could be disallowed but only the profit element embedded in such purchases could be added to the income of the assessee. The estimation varies with the nature of business and no uniform yardstick could be adopted. Given the facts and circumstances of the instant case, I find it reasonable to estimate the profit at 12.5% of the alleged purchases of Rs. 1,93,20,247/....
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....ces have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. We find it further strange that assessee wants the Revenue to produce assessee's own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence, the Revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by Hon'ble Apex Court decision in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and CIT vs. D....
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....taken note of decisions of the apex court on the issue of bogus purchases in the case of CIT Jaipur vs Shruti Gems in ITA No. 658 of 2009. The Hon'ble High Court has referred to the decision of CIT Jaipur vs. Aditya Gems, D. B. in ITA No. 234 of 2008 dated 02.11.2016, wherein the Hon'ble Court had inter alia held as under: "Considering the law declared by the Supreme Court in the case of Vijay Proteins Ltd. Vs. Commissioner of Income Tax, Special Leave to Appeal (C) No.8956/2015 decided on 06.04.2015 whereby the Supreme Court has dismissed the SLP confirmed the order dated 09.12.2014 passed by the Gujarat High Court and other decisions of the High Court of Gujarat in the case of Sanjay Oilcake Industries Vs. Commissioner of Income ....