TaxTMI 
TaxTMI 
2017 (2) TMI 1481
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....e Act'). 2. The only common issue in these cross appeals, one by Revenue and one by assessee, is against the order of CIT(A) estimating the profit rate of 12.5% on the bogus purchase made by assessee as against the entire addition made by the AO of Rs. 60,64,104/-. The assessee has challenged the application of gross profit rate vide ground No.3 as under: - "3. The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in partly confirming the addition to the extent of Rs. 7,58,013/- made by the assessing officer on the basis of information received from Director General of Income Tax (Investigation), Mumbai, by treating genuine purchase of consumables of Rs. 60,04,104/- from MIs. Jain Corporation, M/s. Poop Tradin....
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....ietors have under oath confirmed that no transaction n has been entered with the assessee and only accommodation entries were provided? 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made by the AO on account of bogus purchases to the tune of Rs. 60,64,104/- ignoring the fact that during the course of survey proceedings itself, the Managing Director of the company admitted that purchases made from the parties were non-genuine? 3. Whether on the facts and in the circumstance of the case, the ld. CIT(A) erred in deleting the addition made by the AO on account of bogus purchases when the assessee has failed to give any quantity wise tally of purchases and its consumption in manuf....
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....ces reflecting their relevant purchases of having received of such goods and having consumed of such goods. The assessee furnished copies of ledger accounts of parties along with bank statement. The assessee could not produce copies of purchase order, bills raised, nature of expenditure, goods receipt note, goods / survey inspection report, installation report, work completion note, lorry receipt etc. According to AO the assessee had made these purchases from hawala entry provider, who had admitted this fact that these purchases are never in such hawala sale bills without supplying goods and assessee is one of the beneficiaries of such hawala transaction. Accordingly, AO added the entire bogus purchase of Rs. 60,64,104/-. Aggrieved, assesse....
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....purchases could not be disallowed and it was the extra profit earned by the assessee by using the alleged hawala parties as a conduit which was required to be brought to tax. Such extra profit varies from business to business and has to be estimated on the basis of factors like nature of business, general profitability trend of the business, profit declared by the assessee, VAT benefit derived by the assessee and such other relevant factors. Considering the gross profit rate of 52.50% declared by the assessee during the year, I am of the view that it would meet the end of justice if the extra profit earned by the assessee is estimated at 12.5% of alleged purchases from hawala parties. Accordingly, I estimate the undisclosed profit of the as....