TaxTMI 
TaxTMI 
2020 (4) TMI 220
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....ertain common grounds of appeal. Facts for both the Assessment Years are identical except variation of figures of bogus purchases, therefore, both the appeals were, heard together and are decided by a consolidated order for the sake of gravity. For appreciation of fact, the appeal for Assessment Year 2010-11 is treated as lead case. In appeal for Assessment Year 2010-11, the assessee has raised the following grounds of appeal: 1. The Learned Commissioner of Income Tax (Appeals) committed a gross error of law and fact in sustaining the addition to the extent of Rs. 11,03,632/- made by the assessing officer. 2. The Learned Commissioner of Income Tax (Appeals) grossly erred in upholding the addition to the extent of Rs. 11,03....
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....rocessed under section 143(1). Subsequently, the assessment was re-opened under section 147. The assessment was reITA opened under section 147 on the basis of information received from Sale Tax Department, Government of Maharashtra that certain dealers were indulging in providing accommodation entries of sale and purchases without actual delivery of goods. The list of such dealers along with beneficiaries who were providing/receiving accommodation entries were forwarded to Investigation Wing of Income Tax Department. On the basis of such information, the Assessing Officer made a belief that the income of the assessee escaped assessment, therefore, re-opened the assessment under section 147. Notice under section 148 dated 09.03.2015 was issu....
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....nt through cheque does not establish that the purchases made from genuine and existing parties. In order to verify the transaction, the Assessing Officer issued notice under section 133(6). The notices were returned back by postal authority with remark "Not Known". On the basis of record available before the Assessing Officer. The Assessing Officer recorded that assessee failed to produce the parties, the name of all parties appeared in the list of hawala dealers. The receipt of material in question was not in doubt but material has been received from sources best known to the assessee. The Assessing Officer concluded that tax can be levied only on real income. The basic rule of accountancy is that profit from business cannot be ascertained....
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....about actual delivery of goods by the assessee. The Assessing Officer disallowed only profit margin embedded in such tainted/bogus purchases. The Assessing Officer reasonably estimated the disallowance @ 12.5%. The assessee is not entitled for further relief. 6. We have considered the submission of ld. DR for the revenue and perused the material available on record. Though the assessee has raised as many as five grounds of appeal, however, as per our considered view, the sole ground of appeal relates to confirming the action of Assessing Officer in estimating the disallowance of bogus purchases @ 12.5% of the aggregate of disputed purchases. 7. We have noted that during the re-assessment, the assessee was asked to substantiate the pur....
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....disallowed 12.5% of purchases. The disallowance was worked out to Rs. 11,03,632/-. On appeal, the ld. CIT(A) affirmed the action of Assessing Officer holding that disallowance of 12.5% in the business of wholesale trading of electronic items such as computer parties, accessorises, print cartridges and Sony tapes are rational and justified. We have noted that before us the assessee has not filed even a single document to substantiate his contention. We are conscious of the fact that under the income tax proceeding only tax can be levied on the income component and not on the entire transaction. Even the entire transaction are not verifiable the lower authorities are entitled to tax the income component of transaction only. We have n....