TaxTMI 
TaxTMI 
2020 (11) TMI 255
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....icting the addition to @6.5% of total bogus purchases and computing the profit for the purpose of section 28 of the I.T. Act, 1961 taking in to consideration the bogus bills against which no goods have been received?" 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition to @6.5% of total bogus purchases in presuming that the purchase have been made from unknown parties whereas bills have been received from hawala dealer?" 3. "Ld. CIT(A) erred in restricting the addition to @6.5% of total bogus purchases that purchases have been made from unknown parties without clarification how the payment was made and whether section 69 of the IT Act, 1961 will be applicable or not?....
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....the purchases made from the parties as mentioned in the Assessment Order. In reply assessee furnished copy of ledger account, copy of invoices, copy of delivery challans, proof of transportation, copy of bank statement, note on tally between sales and purchases, note on stock and submitted that the purchases made from the above said parties are genuine. 4. Not convinced with the submissions of the assessee the Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries. Assessing Officer observed that the notices issued u/s. 133(6) of the Act to the parties reveals that the claim of expenses on account of purchases made from the parties are not genuine and the asses....
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....ee had obtained accommodation entries of bogus purchases from the above mentioned hawala parties and hence, the AO made addition of Rs. 9,34,265/- @12.5% of non-genuine purchases. During the appellate proceedings, the appellant has stated that the AO erred in the addition of Rs. 9,34,265/- @12.5% of total purchases being non-genuine without appreciating the facts that the expenditure incurred 011 purchases were duly accounted in the books of account of the appellant. It is also stated that the appellant has proved the purchases made during the year with supporting evidence. This addition are made merely on conjecture and surmises and merely on the basis of certain investigation carried out by the Sales Tax Department without providing the....
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....basis. In the circumstances, the issue to be decided is what is the correct percentage of profit in the line of business in the assessee's case as the assessee company is engaged in the business of trading in ferrous and non ferrous metals. It is submitted by the assessee that 12.5% profit percentage is very high in this business activity. Further, the appellant has relied on the decision of the Ld. CIT(A) on the same issue in the assessee's case for AY 2011-12. The relevant portion of tile order is as under: - "5.10 The appellant made purchases from nine parties who are said to be hawala operators, who is indulged in providing bogus bills without supply of any material. Independent inquiries conducted revealed that no such party ....