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TMI Blog2017 (8) TMI 1286X X X X Extracts X X X X X X X X Extracts X X X X ..... m ITA No.3445/Mum/2015 for the assessment year 2010-11 are that the assessee company, engaged in the business of software development and consultants, filed its return of income for the assessment year 2010-11 on 15-10-2010 declaring total income of Rs. 1,63,92,382. The case was selected for scrutiny and statutory notices u/s 143(2) and 142(1) of the Act were issued alongwith a questionnaire calling for various details. In response to the notices, authorized representative of the assessee appeared from time to time and furnished the details, as called for. During the course of assessment proceedings, based on information received from Investigation Wing of Mumbai that the assessee has obtained bogus purchase bills from various parties, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of VAT and during the course of investigation it was found that there were certain parties, who were engaged in the business of issuing bogus bills as per the requirement of the customers without actual delivery of goods. Those parties have categorically accepted before the authorities that they were involved in providing accommodation entries without delivery of goods. Therefore, the AO opined that the purchases made from those parties are bogus in nature. The AO further observed that though assessee has furnished certain details like sales invoices, details of materials purchased and payment details, but failed to furnish further evidences to prove that the purchases are genuine in the form of delivery notes, weigh bridge slips, etc. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (2015) (I) TMI 828 (Guj HC) and also CIT vs Smit P Sheth 56 ITR 451 (Guj). 5. The CIT(A), after considering the relevant submissions of the assessee observed that the assessee was not in a position to prove the existence of the suppliers. The suppliers were engaged in providing bogus bills without actual delivery of goods. Moreover, the suppliers are not regular parties and they were found to have supplied material only during the year and there was no supply either in the year after or in the subsequent year thereto. All these facts clearly indicate that the transactions are bogus in nature. The CIT(A) further observed that without purchases of materials it was not possible for the assessee to either sell the items or complete the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed the AO to estimate net profit of 15% on total bogus purchases made from those parties. Aggrieved by the order of CIT(A), the revenue is in appeal before us. 6. None appeared for the assessee despite service of notice. However, we find that the matter could be disposed of even without the presence of the assessee. Therefore, we heard the Ld.DR and proceed to dispose of the matter qua the assessee. 7. The Ld. DR submitted that the Ld.CIT(A) erred in directing the AO to estimate profit at 15% on the total alleged bogus purchases without appreciating the fact that there was completely no proof of delivery of purchases of goods and the said sellers were found to be hawala operators / bogus billers. The DR referring to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same time, the AO has made additions to the bogus purchases merely on the basis of information received from Sales-tax Department of Maharashtra wherein they have listed the parties as hawala / bogus operators without conducting any independent enquiry as to the correctness of the books of account of the assessee. The AO has never doubted the sales declared by the assessee. The AO has not pointed out any incorrectness in the books of account of the assessee and also stock details furnished by the assessee. 9. We further observe that the AO has accepted the fact that the assessee might have purchased the goods from the open market by cash and obtained bills from these alleged hawala operators. Once the AO has accepted the fact that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit at 20% on alleged bogus purchases. 10. Coming to the case laws relied upon by the Ld.DR, the Ld.DR relied upon the decision of the Hon'ble Supreme Court in the case of NK Proteins Ltd vs DCIT (supra) and submitted that once purchases from those concerns were treated as bogus, then addition should be made of the entire bogus purchases. We have considered the case law relied upon by the Ld.DR in the light of the facts of the present case. We find that the case before the Hon'ble Supreme Court was that in that case, there was search proceedings at the premises of the assessee and during the course of search, certain blank voucher books in the name of the concerns and blank signed cheques were found. Under those circumstances, the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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