2018 (1) TMI 688

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....ide order dated 20.03.2014 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). 2. The only issue in this appeal of Revenue is against the order of CIT(A) restricting the disallowance of bogus purchases by applying profit rate at the rate of 12.5% of the total bogus purchases. For this Revenue has raised following four grounds: - "1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in relying on the decision of Supreme Court in the case of Kanchanwala Gems Vs. JCIT 288 ITR 10(SC) and Hon'ble High Court's decision in the case of Vijay Protein, Sanjay Oil Cake Industries, etc.. 2. On the facts and in the circumstances of the case, and in law, the Hon'ble CIT(A) er....

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....s. 8095,765/- 4. According to AO, this is a bogus purchase and he added the entire amount of Rs. 80,95,765/- to the returned income of the assessee. Assessee preferred appeal before CIT(A), who restricted the addition at 12.5% of the profit rate of the bogus purchases by observing in Paras 6 and 7 as under: "6. I have carefully considered the rulings of the various case laws cited by the Ld. counsel of the appellant and notice that the same are distinguishable from the facts of the case under appeal. The appellant is wholesale dealer in water purifier, coir mattresses and general supplies, as per audit remark in audit para no.8. During the year, the appellant has declared the GP of Rs. 68,03,803/- @ 27.92% and NP of Rs.....

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....irements such as furnishing of present communicable address, confirmation of ledger account and production of MIs Sai Enterprises for examination and verification. The Ld. A.R. however, has shown his inability to comply with these, rather vide order sheet noting dated 22/7/2015, requested to restrict the disallowance, at the rate of 12.5%, of the bogus purchases, as appellant has already shown NP at the rate of 25% of the total sales, in the wholesale business, which is one of the highest in this line of trade. I have carefully examined the above facts and noticed that the appellant has shown the GP @ 28% and NP 25.10% against total sales of 3.08 crores. The appellant has also furnished quantitative details of goods purchase from Sai Enterp....