TaxTMI 
TaxTMI 
2017 (9) TMI 2048
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....sed u/s 143(1) of the Act. Subsequently, the case was reopened under section 147 of the Act on the basis of information received by the investigation wing of the income tax department regarding assessee's involvement in hawala transactions during the relevant year. As per the information the assessee during the year relevant to the assessment year the assessee obtained bogus receipts showing purchase of Rs. 2,03,98,557/- from the 8 bogus entities mentioned in the assessment order. During the course of re-assessment proceedings, notice u/s 142 (1) was issued and the assessee was asked to submit inter alia details of ledger accounts of the above parties along with copies of bills / invoices raised, proof of delivery of goods with complete transportation details/ rendering of services, complete bank statements and other documentary evidence to prove the genuineness of the transaction with the aforesaid parties. The assessee was further asked to produce the parties for verification. In response thereof the assessee submitted written reply and claimed that all purchases were genuinely made and the payments were made by banking channels. In support of its contention the assessee fur....
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....Representative (DR) submitted that the Ld. CIT (A) has wrongly deleted the addition of Rs. 1,85,10,239/- by restricting the disallowance to 2% of the alleged bogus purchases without appreciating the fact that the assessee was not able to substantiate its claim by wrongly concluding that the goods purchased from the hawala dealer were either utilized in the process of manufacturing or are lying in stock-in-trade on the basis of inspection and testing report of material purchased and stock flow statements submitted during the appellate proceedings without an opportunity to the AO to examine the same in violation of Rule 46A of the Income Tax Rule, 1962. The Ld. DR further submitted that since the impugned order is not based on the evidence the same is liable to be set aside. 5. On the other hand the Ld. counsel for the assessee relying on the findings of the Ld. CIT (A) submitted that the Ld. CIT (A) has decide the issue in question by following the decision dated 20.07.2016 rendered by the ITAT Bench Mumbai in Innovators Facade vs. ACIT (Cir-2), Thane, ITA No. 5450,5451 and 5452/Mum/2012. Hence, there is no merit in the renenue's appeal. 6. We have heard the rival su....
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....urchases of Rs. 1,85,10,239/- is to be deleted. 16. However, respectfully following the recent jurisdictional Hon'ble ITAT decision in the case of Innovators Façade vs. ACIT (Cir-2), Thane, ITA No. 5450,5451 and 5452/Mum/2012 dated. 20.07.2016 wherein the issue has been decided by fixing the addition at 2% of the bogus purchases which is as under:- "From the record we found that assessee had shown GP rate of 16.39% and 23.49 in the assessment year 2009-10 and 2010-11, which is much better than the gross profit rate shown in the assessment year 2008-09 at 11.41%. Moreover the GP rate shown by the assessee is comparable to the GP rate shown by other assessee engaged in similar trade. However, to safeguard the interest of revenue and to cover the leakage of revenue, if anyone, and also totality of facts and circumstances of the case before us, we direct the AO to restrict the addition to the extent of 2% of alleged bogus purchases made. We direct accordingly. Facts and circumstances in the year 2010-11 and 2011-12 are pari material, following the reasoning given hereinabove, we restrict the ITA No. 5450 to 5452/MUM/2015 Assessment Year ....
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....he relevant year. As per the information the assessee during the year relevant to the assessment year the assessee obtained bogus receipts showing purchase of Rs. 2,96,63,889/- from the six bogus entities mentioned in the assessment order. During the course of re-assessment proceedings, notice u/s 142 (1) was issued and the assessee was asked to submit inter alia details of ledger accounts of the above parties along with copies of bills / invoices raised proffer of delivery of goods with complete transportation details/ rendering of services, complete bank statements and other documentary evidence to prove the genuineness of the transaction with the aforesaid parties. The assessee was further asked to produce the parties for verification. In response thereof the assessee submitted written reply and claimed that all purchases were genuinely made and the payments were made by banking channels. 2. The AO after considering the submissions of the assessee and cases relied upon by the assessee, determined the amount of bogus purchase u/s 69 of the Act at Rs 2,96,63,889/- and added back the said amount to the income of the assessee. Similarly, the AO also made GP addition of Rs.&n....
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....es to 0.25% as against 1% made in the assessment order without bringing anything on record to show that the same is fixed at the prevailing market rate whereas in the assessment order it was mentioned that the percentage of commission applied is based on the statement of some hawala dealers before the Sales-tax authorities. 5. The appellant prays that the order of the CIT (A), Mumbai on the above directions be set-aside and that of the assessing officer be restored." "19. I have carefully considered the A.O.'s contention and Appellant's submission and arguments. The A.O's main grievance was the alleged six parties from whom the appellant purchased the materials are hawala parties and bogus as per the investigation carried on by the Sales Tax Department and also their name appeared on the website of Sales Tax Department of Maharashtra. Further these six parties did not respond to the notice issued under section 133(6) of the Act for verification and cross examination. Therefore, the purchases made from then are bogus. On the other hand A.R. of the appellant argued that the materials purchased from these six parties have been utilized in the various projects underta....
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....similar trade. However, to safeguard the interest of revenue and to cover the leakage of revenue, if anyone, and also totality of facts and circumstances of the case before us, we direct the AO to restrict the addition to the extent of 2% of alleged bogus purchases made. We direct accordingly. Facts and circumstances in the year 2010-11 and 2011-12 are pari material, following the reasoning given hereinabove, we restrict the ITA No. 5450 to 5452/MUM/2015 Assessment Year 2009-10 to 2011-12 additions in these years also to the extent of 2% of alleged bogus purchases so made. We direct accordingly. However, to safeguard the interest of revenue and to cover the leakage of revenue, if anyone, and also totality of facts and circumstances of the case before me, I direct the AO to restrict the addition to the extent of 2% of alleged bogus purchased so made. I direct the AO to restrict the addition of bogus purchase to the extent of 2% which works out to Rs. 5,93,278/- (2% of Rs. 2,96,63,889/-) and delete the balance addition of Rs. 5,93,277/-. Accordingly this ground of appeal is partly allowed. 22. Further, the A.O. has made an addition on al....