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2018 (10) TMI 801 - AT - Income TaxAddition at 12.5% of the alleged bogus purchases - Held that:- The assessee was in possession of primary purchases documents. At the same time, the assessee could not produce even a single party to confirm the transactions and even failed to provide the addresses of the suppliers so as to enable further investigation by AO. The delivery of the material could not be substantiated despite the fact that the assessee was dealing in item like steel. All these factors cast a serious doubt on assessee’s claim. Therefore the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which first appellate authority has rightly done. As assessee was dealing in price sensitive item like Steel, we find the estimation of 12.5% to be on the higher side. We restrict the same to 8% of alleged bogus purchases of ₹ 25,61,087/- which comes to ₹ 2,04,887/-. Ground number-1 stand partly allowed. Addition of peak credit u/s 69C on the premise that material was purchased in cash from the open market whereas the accommodation purchase bills were procured from the alleged hawala dealers - Held that:- CIT(A) while confirming the stand of AO, estimated the additions @12.5% instead of peak credit keeping in view several judicial pronouncements and therefore, there was no new addition made by Ld. CIT(A) as is alleged by Ld. AR before us. Only the method of estimation has been modified by Ld. CIT(A) and nothing more. Nevertheless, the addition as made by both the lower authorities spring out of the fact that the assessee, as per the information of Sales Tax Authorities, was found to be indulging in procuring accommodation bills from certain parties. Therefore, we do not find any substance in the legal arguments as raised by Ld. AR before us. Ground numbers 2 to 5 stand dismissed.
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