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TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 563
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....n the so called un-proved purchases of Rs. 57,07,700/- the basis of information of the Sales Tax Department about suspicious dealers after rejecting the book result u/s. 145(3). b) The Id. CITJA) failed to appreciate that :- i) all the purchases are genuine beyond doubt and supported by sufficient materials and are backed by corresponding sales; ii) the gross profit ratio shown by the Appellant is quite reasonable; iii) the payment of purchases are made by account payee cheques only; iv) nothing has been brought on record by the Id. AO that money has exchanged the hands in lieu of payment made for these purchases by account payee cheque; and v) the Id. AO neither provided copy of materials and statements relied upon by him nor allowed any opportunity to the Appellant to cross examine those parties who have been alleged to have provided the alleged entries of such purchases. c) The id. CIT(A) failed to appreciate that the books of account maintained by the Appellant are correct and complete in accordance with the method of accounting regularly and consistently followed by the Appellant. d) In reaching to the conclusion and confirming such addition the Id. AO omitted ....
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....ho had issued bogus purchase bills to various parties in Mumbai and other places. As per list of beneficiaries, the assessee is one of the beneficiary, who had taken accommodation bills of bogus purchases from M/s Shree Sundha Steels Pvt Ltd for Rs. 57,07,700/- . The case was selected for scrutiny and the assessment has been completed u/s. 143(3).r.w.s. 147 of the I.T.Act, 1961 on 13/03/2015 and determined total income of Rs. 16,57,410/-, after making 12.50% additions towards alleged bogus purchase from those parties and made additions of Rs. 7,13,462/-. 6. Aggrieved by the assessment order, the assesee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assesse has filed elaborate written submissions, on the issue, which has been reproduced at Para 4 on pages 4 to 5 of Ld.CIT(A) order. The sum and substance of arguments of the assessee before the Ld.CIT(A) are that purchase from the above party is genuine, which is supported by necessary evidences. Therefore, no additions could be made on the basis of information received from third party. The Ld.CIT(A), after considering relevant submission of the assessee and also, by following the decision of Hon'ble Gujarat Hi....
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.... found that some of the alleged suppliers of steel to the assessee had not supplied any goods but had only provided sale bills and hence, purchases from the said parties were held to be bogus. Thee AO in that case added the entire amount of purchases to gross profit of the assessee. Ld. CFT(A) having found that the assesses had indeed purchased though not from named parties but other parties from grey market, partially sustained the addition as probable profit of the assessee. The Tribunal however, sustained the addition to the extent of 12.5%- Taking into account the above facts, the Hon'ble Gujarat High Court held that since the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded in such purchases could be added to the assessee's Income and as such no question of law arose in such estimation. 9.11 In the present case also, AO concluded that the appellant has not purchased from the party and estimated the profit percentage @12.5% on such purchase amount. During the appellate proceedings, AR in his written submissions pleaded to delete the addition, though the AR also cited the above said d....
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...., but failed to file further evidences to conclusively prove purchases to the satisfactions of the Ld.AO. At the same time, the Ld. AO had also failed to take the investigation to a logical conclusion by carrying out necessary enquires, but he solely relied upon information received from investigation wing, which was further supported by information received from Maharashtra Sales Tax Department. Under these circumstances, it is difficult to accept arguments of both the sides. Further, in a case where purchases are considered to be purchased from suspicious/hawala dealers, various High Courts and Tribunals had considered an identical issue in light of investigation carried out by the Sales Tax Department and held that in case of purchases claims to have made from alleged hawala dealers, only profit element embedded in those purchases needs to be taxed, but not total purchase from those parties. The Hon'ble Gujarat High Court, in the case of CIT vs Simith P.Sheth 356 ITR 451 had considered a similar issue and held that at the time of estimation of profit from alleged bogus purchases no uniform yardsticks could be adopted, but it depends upon facts of each case. The ITAT, Mumbai, in....