TaxTMI 
TaxTMI 
2019 (4) TMI 856
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....s Ushdev International Ltd. During the course of search, it was noticed that it has purchased goods from certain dealers, who have been identified as hawala dealers by the Sales tax department of Government of Maharashtra, i.e., those dealers were providing only accommodation bills without actually supplying materials. It was also noticed that certain other group concerns were also purchasing materials from such hawala dealers. It was noticed that the assessee has also purchased goods from a concern M/s Ragini Trading & Investments P Ltd, which, in turn, has purchased goods from some hawala dealers. The AO has stated that the assessee herein is a group concern of M/s Ushdev International. However, the Ld A.R disputed the said fact and submitted that the assessee does not belong to the above said group. Consequent to the search operations, the assessee's case was also centralised with the present assessing officer and the present assessment has been completed u/s 143(3) r.w.s 153A of the Act. 4. The AO noticed that the assessee has purchased materials to the tune of Rs. 5268.07 lakhs from M/s Ragini Trading and Investments Ltd (hereinafter referred as "RTIL"). As noticed earli....
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....in the case of Kachwala Gems vs. JCIT (2007) (288 ITR 10). The AO also observed that the real test with regard to the genuineness of transaction is "Preponderance of Probabilities" and surrounding circumstances as per the decision rendered by Hon'ble Supreme Court in the case of C. Vasantlal & Co. vs. CIT (1962)(45 ITR 206), Chaturbhuj Panauj AIR 1969 (SC) and Sumati Dayal vs. CIT (1995)(214 ITR 801)(SC) and CIT vs. Durga Prasad More (82 ITR 540). The AO also held that the purchases made from hawala dealers falls within the ambit of "colouorable devices" as observed by Hon'ble Supreme Court in the case of Mc Dowell and Co Ltd vs. CTO (154 ITR 148). The AO also relied upon various other case laws to hold that the entries made in the books of accounts are not determinative of the genuineness. He also took support of the decision rendered by Hon'ble Delhi High Court in the case of CIT vs. La Medica (250 ITR 575) to hold that the sum paid towards fictitious purchases should be treated as undisclosed income of the assessee. 8. Accordingly, the AO held that the purchases made by the assessee remained unverifiable and accordingly rejected the books of account u/s 145(3) of the Act. ....
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.... Simit Sheth (2013)(38 taxmann.com 385)(Guj). The Ld CIT(A) noticed that the Mumbai bench of ITAT has also estimated G.P rate of 12.50% of bogus purchases in the case of M/s Ratnagiri Steels (80 taxmann.com 265)(Mum-ITAT), but allowed credit of gross profit declared on bogus purchases. Following the same, the Ld CIT(A) directed the AO to estimate profit at 12.50% on purchases and allow credit of Gross profit already shown by the assessee in the regular books of accounts. 11. Aggrieved by the order passed by Ld CIT(A), the assessee has filed this appeal before us. 12. The Ld A.R submitted that the assessee has not purchased goods from any of the tainted/hawala dealers. It is the case of the revenue that M/s RTIL, from whom the assessee has purchased goods, had purchased goods from hawala dealers. He submitted that the sales made by M/s RTIL have been accepted in the hands of RTIL, meaning thereby, the purchases made by the assessee from RTIL could not have been suspected. He submitted that the assessee has furnished all the relevant details, viz., the purchase invoices, the quantity details, sales details, payment details and the quantity details reconciling the purchases w....
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.... gross profit rate of 12.50% in the facts of present case. 14. The Ld A.R further submitted that an almost identical issue was considered by Ahmedabad bench of Tribunal in the case of Tejus Rohit Kumar Kapadia vs. ACIT (ITA No.1994, 1990 & 2095/Ahd/2010 dated 16.01.2017) and the Tribunal has confirmed the order of Ld CIT(A) in deleting the disallowance of purchases. The decision so rendered by the Tribunal has since been upheld by the Hon'ble Gujarat High Court, vide its order dated 18-09-2017 reported in (2018)(94 taxmann.com 324). 15. The Ld D.R, on the contrary, supported the order passed by Ld CIT(A). He further submitted that the assessee had agreed for addition of 12.50% of value of purchases before Ld CIT(A). He also submitted that the assessing officer has taken the view that the assessee has used M/s RTIL as pipeline agency for purchasing goods from hawala dealers. 16. In the rejoinder, the Ld A.R submitted that the assessee has not accepted for addition of 12.50% of value of purchases, as submitted by Ld D.R. He submitted that the assessee had raised an alternative contention before Ld CIT(A) that the profit may be estimated. However, the assessee is standing by ....
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.... A.R, the assessee could not have sold the goods without actually purchasing the same. Though the assessing officer has observed that the assessee might have received the cash back from its suppliers, yet the same is based on surmises and conjectures only and not based on any material on record. 19. Before us, the Ld A.R placed reliance on the decision rendered by Ahmedabad bench of Tribunal in the case of Shri Tejus Rohitkumar Kapadia (supra), which has since been upheld by Hon'ble Gujarat High Court. In the above said case, the purchases made by the assessee were disbelieved on the basis of information obtained in the hands of another assessee. The Ld CIT(A), however, noticed that the assessee was a trader and he has sold the goods purchased from a concern named M/s Raj Impex. Further, the payments have been made by way of account payee cheques. Accordingly the Ld CIT(A) held that there is no basis or evidence to treat the purchases made from M/s Raj Impex as bogus and accordingly directed the AO to delete the addition. The ITAT, while confirming the view taken by Ld CIT(A), also observed that there is no evidence to draw the conclusion that the entire purchase consideration w....