TaxTMI 
TaxTMI 
2018 (2) TMI 1971
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.... "1. The learned CIT(A)-10 has erred in dismissing the grounds of appeals without considering the submission made by appellant and upheld the addition of Rs. 27,6,854/- made by the Income Tax Officer. 2. The appellant craves leave to add, amend, alter or delete the said ground of appeal." 2. Briefly stated, the facts of the case are that the assessee company which is engaged in the business of dealing in stainless steel items had filed its return of income for AY 2009-10 on 17.09.2009, declaring total income at Rs. 21,682/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. That information shared by the DGIT (Investigation), Mumbai with the A.O as regards certain parties which were found by t....
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....sessee despite the said fact had failed to produce them for examination before the A.O. The A.O on the basis of his aforesaid observations held a conviction that the assessee by failing to prove the authenticity of the purchase transactions under consideration had failed to discharge the onus as was so cast upon it. However, the A.O observed that as there were sales corresponding to the purchases under consideration, therefore, it could safely be concluded that though the assessee had purchased the goods under consideration, but however, the source of the said purchases could not be verified. The A.O in the backdrop of the information shared by the sale tax authorities that the assessee as a beneficiary had taken accommodation entries, ther....
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....aterial along with the copy of the stock register, but however, failed to produce the delivery challans for the reason that the same on receipt of goods were returned to the seller and no copy of the same was retained. The CIT(A) after deliberating on the explanation of the assessee was however not impressed by the same. The CIT(A) observed that not only the aforesaid supplier parties were found to be nonexistent, but rather, the assessee despite specific directions by the A.O had neither produced them for examination, nor placed their confirmations on record. The CIT(A) further observed that the assessee had also failed to place on record the delivery challans, transport bills/receipts, confirmations from transport operators, assessment un....
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.... aforementioned hawala parties, but from the open/grey market. The CIT(A) further observed that now when the assessee had purchased the goods under consideration from the open/grey market, therefore, it would have benefited from making of these purchases by saving on account of sale tax and other taxes and duties, which otherwise would be leviable in case if the purchases would have been made from the regular market. The CIT(A) while deliberating on the issue as regards the quantification of the profit element involved in making of the bogus purchases, observed that the same would vary from business to business and no uniform yardstick could be adopted. The CIT(A) by placing reliance on the orders passed by the ITAT, Mumbai, in the case of ....
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....icity of the purchase transactions under consideration, therefore, the A.O had rightly characterized the said purchase transactions as bogus. We are of the view that as the factum of purchase of the goods under consideration was not doubted by the lower authorities, therefore, they had rightly restricted the addition in the hands of the assessee to the extent of the monetary benefit which the assessee would had generated by making the purchases from the open/grey market. We find that the Hon'ble High Court of Gujarat in the case of CIT Vs. Simit P. Sheth (2013) 356 ITR 451 (Guj) had held that the profit element involved in making of bogus purchases could fairly be taken @ 12.5% of its value. We find that the judgment of the Hon'ble High Cou....