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2015 (12) TMI 620 - ITAT MUMBAI

2015 (12) TMI 620 - ITAT MUMBAI - TMI - Unexplained purchases - estimation of income - Held that:- It is not in dispute that the assessee made sales out of the purchases made from grey market and even if some benefit is accrued it has to be in tune with the normal profit earned in this line of business. We are concerned with A.Ys. 2009-10 and 2011-12 wherein the assessee has declared gross profit of 19.49% and 18.85%. For A.Y. 2008-09 she declared 22.34% GP and for 2013-14 it was 22.46%. Thus by .....

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the learned CIT(A), the AO has no discretion in this regard. However, the assessee would get substantial relief, if any, in the light of the fact that the disallowance is scaled down further. - Decided partly in favour of assessee. - ITA NoS. 4559 & 4561/Mum/2015 - Dated:- 12-10-2015 - Shri D. Manmohan, Vice President For The Appellant : Shri Anuj Kisnadwala For The Respondent : Shri Jeevan Lal Lavidya ORDER Per D. Manmohan, V.P. These two appeals by the assessee are directed against the orders .....

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giving names and addresses of persons who have provided entries/bogus purchase bills to a large number of tax payers, the AO reopened the assessment by issuing notice under section 148 of the Act and after considering the issue exhaustively he observed that the assessee has not made any effort either to produce the parties or to furnish the exact whereabouts of them to prove the genuineness the purchase from Top Shop Trading Company Pvt. Ltd., Mahavir Enterprises, etc. Assessee neither produced .....

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ssessee contended before the CIT(A) that the addition made on account of alleged information of non genuine purchases is not in accordance with law. It was contended that reconciliation of transaction of purchases and receipt of material, etc., after a gap of more than two years, may be difficult for the assessee - to produce the parties - and so long as the sales are accounted for, assessee cannot be expected to discharge her onus of proving the source of purchase. Therefore the AO should not h .....

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e Department of ascertain the correct amount of income from the records/books maintained by the assessee. He further observed that the onus is on the assessee to prove the claim of expenditure and in the absence of proving the same the AO was justified in making the addition. He also observed that the assessee failed to furnish quantitative and qualitative details of opening stock, purchases, sales and closing stock, item-wise and party-wise and thus the books of the assessee are not complete in .....

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but taking the purchase by normal rate, the disallowance can at best be 25% of the unexplained purchases. In para 5.5 of the order of the CIT(A) it is noticed that the learned A.R. for the assessee prayed that at the most 25% of bogus purchases need be disallowed as the assessee is not in a position to prove the purchases. 6. The learned CIT(A) has taken into consideration several case law in support of his conclusion that in the case of unproved purchases even 100% addition can be made though .....

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In my considered opinion, it is a case where, at the most, purchases might have been inflated. Considering the decision of Hon'ble Gujarat HC in the case of Sanjay Oil Cake Mills & Vijay Proteins etc. as above, in my opinion, 25% disallowance, out of hawala purchases, will be reasonable. Accordingly, I hereby confirm 25% disallowance of above purchases i.e. ₹ 80,240/- [25% of ₹ 3,20,965/-] and delete the balance amount of ₹ 2,40,725/- (Rs.3,20,965- 80,240/-), out of to .....

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addition as confirmed by him. 8. Further aggrieved, assessee is in appeal before the Tribunal contending, inter alia, that even 25% of the original addition as confirmed by the CIT(A) is not according to the law. It was further contended that the learned CIT(A) erred in confirming charging of interest under section 234A, 234B and 234C of the Act. 9. The learned counsel for the assessee submitted that in this line of business the profit earned by the assessee works out to around 18% whereas the .....

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