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2017 (3) TMI 1036 - AT - Income TaxG.P. addition - purchase from hawala operators - bogus purchases - Held that:- The purchases are made by the assessee and amounts are standing in the books of the assessee and onus is on the assessee to prove the genuineness of the purchase transaction. We have observed that the assessee could not produce these three parties except Bharat Forge despite being called by the AO . The notices issued u/s 133(6) of 1961 had returned un-served as these parties do not exist on the addresses given by them. The assessee could not produce stock register and also could not prove actual delivery of material being purchased from these hawala dealers as octroi receipts, goods receipt note, lorry receipts, purchase orders could not be produced nor invoices had any details of movement of goods to assessee from the alleged hawala dealers,, however, the assessee did produced the sample copies of purchase invoices and also submitted that payments were made by account payee cheque. Under the factual matrix of the case , we have observed that the learned CIT(A) rightly held that profit embedded in these purchases are to be estimated wherein the learned CIT(A) estimated GP @ 17.5% on alleged bogus purchases as against 7.11% declared by the assessee. End of justice will be met in the instant case if GP is estimated to tune of 12.5% of the purchases from these alleged hawala operators which will cover any leakage of Revenue by way of VAT, commission etc. . Thus, as compared to the GP ratio at 7.11% declared by the assessee, we are estimating GP ratio at the rate of 12.5% on the said bogus purchases wherein the assessee will be allowed credit of declared GP ratio of 7.11% and net addition to GP ratio shall be to the tune of 5.39% on bogus purchases, hence , we allow partial relief to the assessee.We order accordingly.
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