TMI Blog2017 (5) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee (para 5.4 and 5.5 of the assessment order), the A.O. could have examined the witness. The A.O. has failed to do so. Addition of entire amount of purchases to gross profit of the assessee - Held that:- We have to ascertain the profit element embedded in such purchases which can be added to the income of the assessee. We find it just and fair to estimate 12.5% of the purchase cost of ₹ 62,40,000/- as the profit element and direct the A.O. to adopt the same and make disallowance. As the enhancement of ₹ 3,12,000/- made by the learned CIT(A) is bereft of any objective yardstick as the same has been estimated @ 5% of the value of bills on the presumption that the assessee might have incurred expenditure in cash to secure bogus bills, the A.O. is directed to delete the same. - ITA No. 3520/MUM/2015 - - - Dated:- 19-5-2017 - SHRI JOGINDER SINGH (JUDICIAL MEMBER.) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER.) For the Assessee : Dr. K. Shivaram, Senior Advocate For the Revenue : Shri Purushottam Kumar, DR ORDER PER N.K. PRADHAN, AM This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed. 3 4. We come to the 3rd ground of appeal. The Assessing Officer (A.O.) found on the basis of information received from the Investigation Wing of the Department, that the assessee was one of the beneficiaries of hawala transactions routed through 15 hawala parties. The A.O. noted that the assessee had already added purchases from the 4 hawala parties in the revised return of income filed and paid the tax. Then the A.O. asked the assessee to prove the genuineness of expenditure in the context of 13 hawala parties. In response to it, the assessee submitted before the A.O. the supporting evidences with respect to 11 parties. The A.O. observed that the assessee failed to file bills with respect to 5 parties. One may refer to para 5.4 and 5.5 of the assessment order on the above. The A.O. took into account the fact that 13 hawala parties had accepted during the course of search and seizure by the Sales Tax Department that they had not done any genuine business and had issued bogus sale bills only. The A.O. has narrated the transactions entered into by the assessee with the said 13 parties at page 5-10 of the assessment order and made an addition of ₹ 62,40,000/-. 5. Agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low the transactions narrated by the A.O. in five cases: Shree Sai Trading Co. : As per the information received from the Investigation Wing of the Department, the assessee was one of the beneficiaries of hawala transactions totalling to ₹ 3,12,000/- routed through this hawala party having TIN No. 27660660931V and PAN No. ATQPP8547E. This fact was confirmed during the course of search proceedings by the Sales Tax Department, Mumbai. Therefore, the assessee has failed to prove the genuineness of transaction of ₹ 3,12,000/- with M/s. Shree Sai Trading Co. Hermitage Trading Company (Pvt. Ltd.) : As per the information received from the Investigation Wing of the Department, the assessee was one of the beneficiaries of hawala transactions totalling to ₹ 3,12,000/- routed through this hawala party having TIN No. 27810672925V and PAN No. AACCH0763L. This fact was confirmed during the course of search proceedings by the Sales Tax Department, Mumbai. Therefore, the assessee has failed to prove the genuineness of transaction of ₹ 3,12,000/- with M/s Hermitage Trading Company (Pvt.) Ltd. Polsons Sales Agency Pvt. Ltd. : As the assessee has suo motu cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Purvi Sales Agency Pvt. Ltd., Volcano Trading Pvt. Ltd., Balaji Marketing Pvt. Ltd., Park Distributors Pvt. Ltd., Radhe Economical Services Pvt. Ltd., Shivam Corporation, Adept Agency Deep Enterprises, etc. recorded on oath under section 14 of the Maharashtra Value Added Tax Act, 2002 on 28.02.2012, it was stated by him that he used to issue only sales invoices to the company who approaches him for invoices of his companies. He further stated that he used to give them invoices at commission of 5% of the bill amount and has introduced bogus purchase bills and typed these invoices in his office. Further, these purchase invoices are given to him by Mr. Arjun Singh, Jubban Singh Anirudh Vyas. He also stated that he has never dealt in any goods and his sales invoices are not supported with any goods. Thus, in view of the statement of Shri Mahendra Dhabalia, it is evident that the assessee has failed to prove the genuineness of transaction of ₹ 7,80,000/- with M/s. Volcano Trading Pvt. Ltd. 8.1 As can be seen from the above, the A.O. has not gone beyond the findings of the Sales Tax Department. In Income-tax proceedings, there is extensive use of oral examination of witness ..... X X X X Extracts X X X X X X X X Extracts X X X X
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