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TMI Blog2017 (8) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... mmon, these appeals were heard together and are disposed of by this common order. 2. The brief facts of the case, extracted from ITA No.2241/Mum/2016 for the assessment year 2011-12, are that the assessee is a partnership firm engaged in the business of manufacturing and trading in stainless steel utencils, filed its return of income for AY 2011-12 on 30-11-2011 declaring total income of Rs. 11,59,860. Subsequently, the case was reopened u/s 147 for the reason that income chargeable to tax had escaped assessment within the meaning of section 147 of the Act. The AO has recorded reasons for reopening of assessment on the basis of information received from the DGIT (Inv) which revealed that assessee has purchased materials from certain partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice to the assessee and asked to furnish as to why purchases made from the so-called hawala operators cannot be disallowed u/s 69C of the Act. In response to show cause notice, the assessee vide its letter dated 14-03-2014 submitted that the purchases from the said parties are genuine and supported by proper purchase bills and payments were made through cheques. In support of his argument, filed copies of purchase bills and stock registers. The AO, considering the statement given by the partner of the firm before DDIT(Inv), held that it is undoubtedly clear that the assessee has been obtaining accommodation bills with a view to inflate the purchases. The AO further observed that while answering to a specific question before the DDIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d quantitative details of stock with respect to sales and corresponding purchases from the parties. The CIT(A) further observed that the AO has never disputed or examined the aspect of sales receipts. The AO had made additions solely on the basis of information received from the VAT department without conducting further enquiry. Once the assessee has brought on record the details of payments by account payee cheque it was incumbent upon the AO to have verified immediate cash withdrawals from the bank of the assessee and also from the bank of the suppliers. No such exercise has been done or findings were recorded by the AO. There is no evidence to show that the assessee has received cash back from the suppliers. In the absence of any other f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of NK Protiens Ltd vs CIT in SLP No.759 of 2017 dated 26-01-2017 submitted that once it is proved that the purchases are bogus, then, addition should be made for entire purchases and not for profit element embedded in such purchases. 7. None appeared for the assessee. We have heard the Ld. DR and perused the material available on record. The AO made additions towards purchases from certain parties on the ground that they were involved in providing accommodation entries without actual delivery of goods. The AO further observed that information received from DDIT (Inv) and report of Sales-tax department of Maharashtra categorically found that the said parties were involved in providing bogus bills without actual de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to produce the parties in person before the AO for examination. Though the assessee has produced certain details to prove the purchases from the said parties as genuine, in view of the fact that the assessee could not prove the existence of the parties and also could not rebut the finding of the AO in the backdrop of report of Maharashtra Sales-tax department, the said purchases could not be accepted as genuine. But keeping in view the fact that the AO has not doubted sales declared by the assessee and also not pointed out any defects in the books of account or stock registers, a reasonable inference can be drawn that the assessee has obtained bills from the hawala operators to cover up the purchases from the grey market. Under thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the CIT(A). Therefore, for the detailed discussion in the preceding paragraphs, we direct the AO to estimate net profit of 12.5% on bogus purchases in these years also. Accordingly, appeals filed by the revenue in ITA No.2242/Mum/2016 and ITA No.2243/Mum/2016 are also dismissed. 11. The facts and issues involved in ITA No.2608/Mum/2016 and ITA No.2591/Mum/2016 are also identical to ITA No.2241/Mum/2016, except to the extent of net profit estimated by the CIT(A). In this case, the CIT(A) has estimated net profit of 25% on total bogus purchases. Since the assessee is not in appeal against the order of CIT(A), for the same reasons given in ITA No.2241/Mum/2011, we uphold the order of CIT(A) estimating net profit at 25% on total bogus pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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