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2019 (11) TMI 143 - ITAT MUMBAIDisallowance of bogus purchases @ 12.5% of bogus/hawala dealers/non-existent vendors - HELD THAT:- AO has not disputed the sales of the assessee. AO solely relied upon the report of Investigation Wing of Sale Tax Department. CIT(A), the assessee urged that the purchases shown by assessee are genuine. The payments of purchases were made through account payee cheques. The goods were received by assessee and quantitative details and corresponding sales were shown to the AO. Though, the assessee fairly stated that they are unable to produce the supplier for verification. Also urged that the assessee has paid sale tax on behalf of the dealers and relied upon the decision of Hon’ble Gujarat High Court in Simith P. Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] . CIT(A) after considering the material placed before him and the ratio of the decisions including the decision of Simith P. Seth (supra) concluded that it has been held by various Courts that where assessee could show that he has made purchases and there are corresponding sales against the purchases, in such circumstances, it is appropriate to tax the possible profit of such purchase from non-genuine parties. CIT(A) restricted the disallowance to 12.5% of the purchases. CIT(A) after considering the material and the various decision of superior courts arrived on a fair conclusion, which we affirm. Even otherwise the revenue authority is required to tax the profit earned by the assessee on such bogus purchases and not the entire transaction. - Decided against revenue.
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