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2020 (4) TMI 326 - AT - Income TaxBogus purchases - AO has made 12.50% additions - assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers - Addition enhanced to 100% by the ld. CIT (A) - HELD THAT:- We find that both the sides failed to prove the case in their favour with necessary evidences. Although, assessee has filed certain basic evidences, but failed to file further evidences to conclusively prove purchases to satisfactions of the Ld.AO. At the same time, the Ld. AO had also failed to take the investigation to a logical conclusion by carrying out necessary enquires, but he solely relied upon information received from investigation wing, which was further supported by information received from Maharashtra Sales Tax Department. Under these circumstances, it is difficult to accept arguments of both the sides. Further, in a situation where purchase is made from alleged hawala dealers, various High Courts and Tribunals had considered an identical issue in light of investigation carried out by the Sales Tax Department and held that in case purchases claims to have made from alleged hawala dealers, only profit element embedded in those purchases needs to be taxed, but not total purchase from those parties. Consistent with view taken by the Co-ordinate Bench in number of cases, and also by following the decision of Hon’ble Bombay High Court in the case of The PCIT vs Mohammed Haji Adam & Co [2019 (2) TMI 1632 - BOMBAY HIGH COURT] we are of the considered view that a reasonable profit on alleged bogus purchases would meet ends of justice. Hence, we direct the ld. AO to estimate 12.50% profit on alleged bogus purchases and further allow deductions towards GP already declared for the year in regular books of accounts.
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