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2017 (12) TMI 1796 - AT - Income TaxEstimation of income - bogus purchases - restriction of addition on account of bogus purchases to the tune of 7.5% - HELD THAT:- We find that the assessee undoubtedly has availed hawala entries from the hawala operators. The explanation offered by the assessee did not find favour of the assessing officer and hence the AO added a sum of ₹ 51,49,820/- to the total income u/s 69C as peak credit on the basis of undisclosed cash which were treated as bogus purchase. The CIT(A) partly sustained the addition at 7.5% of the total bogus purchases. CIT(A) while restricting the addition of 7.5% of the total bogus purchases followed its predecessor’s order. We also find that the co-ordinate benches of the Tribunal have been taking a consistent view under same facts that some percentage addition ranging from 5% to 12.50% or a reasonable percentage of the bogus purchase should be made towards savings which the assessee may have made by purchasing the material from gray market thereby saving VAT and other incidental taxes. Therefore we are of the opinion that the ld.CIT(A) has taken a reasoned and cogent view in the assessee’s case by applying 7.50% of the bogus purchases and therefore we find no reason to interfere in the same. Accordingly we affirm the order of CIT(A) by dismissing the appeal of the assessee.
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