TaxTMI 
TaxTMI 
2020 (11) TMI 256
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....enuine/bogus by the Assessing Officer being peak of credits. 2. Briefly stated the facts are that, the assessee a firm engaged in the business of trading in pneumatic fittings, filed return of income on 15.10.2010 and 26.09.2011 declaring income of Rs..8,19,335/- and Rs..11,37,284/- for A.Y. 2010-11 and A.Y. 2011-12 respectively and the returns were processed u/s. 143(1) of the Act. Subsequently, Assessing Officer received information from the DGIT (Inv.,), Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. The assessments were reopened U/s. 147 of the Act based on the information received from DGIT(Inv.) Mumbai, that the assessee has availed accommodation ent....
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....- and Rs..24,08,111/- for A.Y. 2010-11 and A.Y. 2011-12 respectively, and added to the income of the assessee. On appeal the Ld.CIT(A) considering the evidences and various submissions of the assessee restricted the disallowance to the extent 5% of the non-genuine purchases. 4. Inspite of notice none appeared on behalf of the assessee nor any adjournment was sought by the assessee. Therefore, I proceed to dispose off these appeals on hearing the Ld. DR on merits. 5. Heard Ld. DR, perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A), I find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order restric....
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....the assessee sold the goods and sale invoices are available, presumed that the assessee purchased the said goods in grey market in cash and worked out the peak cash. There is a folly in the peak credit worked out by the AO. It is not a onetime purchase by the assessee as the assessee purchased goods and also sold and sale receipts received also have to be factored in? If the assumption of the AO is to be accepted that the hawala parties are entry providers, the payments made to such parties will also come back in cash. The AO while assuming the cash purchases, has not considered the cash received from the hawala parties and sale receipts, which is available in the hands of the assessee. Therefore the peak credit worked out is not correct ....
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....s, the action of the Assessing Officer in ignoring them cannot be accepted and the addition of peak credit /bogus purchases is not sustainable in law and facts. The appellant could have obtained the accommodation bills for the material purchased locally as noted by the AO. In other words the entities may not be the actual supplier but may have provided the bills for the material purchased locally. This is not case in which the signed blank cheque books etc. found with the buyer to hold that the purchases of material were not at all made but entered in the stock to inflate the raw material and to suppress the profits and therefore, the decision of the Supreme Court in the case of N K Proteins Ltd 250 taxman 0022(SC) would not apply to the ca....