TMI Blog2017 (9) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act were returned unserved but simultaneously, we find that the AO has not doubted the sales out of materials purchased by the assessee from these hawala operators which means that the assessee purchased the material from the grey market thereby making savings of taxes like VAT octroi etc. These purchases and sales were duly recorded in the books of accounts of the assessee. The co-ordinate benches of the Tribunal in similar cases have been taking a consistent view in such cases by upholding the disallowance @ 12.5% of such unverified purchases towards various savings and leakages of revenue. Accordingly, we set aside the order of ld.CIT(A)and AO is directed accordingly - Decided partly in favor of assessee. Addition on account of unexplained expenditure u/s 69C - evidences to prove the genuineness of purchase - Held that:- We find that the purchases from M/s Shree Sundha Steel Pvt Ltd amounting to ₹ 25,96,500/- were rightly deleted by the CIT(A) as the said party was not hawala dealer and the AO has not recorded any findings against M/s Shree Sundha Steel Pvt Ltd being hawala dealer when the assessee specifically submitted in that context during re-assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 of the Income Tax Act, 1961. The AO reopened the assessment after receipt of information from DGIT(Inv), Pune to the effect that the Sales Tax Department, Mumbai, Government of Maharashtra has unearthed a racket involving more than 1935 hawala dealers engaged in issuing bogus invoices of purchases of which the assessee was one of the beneficiaries. Accordingly, the case of the assessee was reopened u/s 148 of the Act and the AO,during assessment proceedings, found that the assessee had made purchases worth ₹ 1,82,36,619/- from 11 parties as stated at pages 1 and 2 of the assessment order. During the course of assessment proceedings, the assessee submitted the delivery challans, Xerox copies of the bills, transportation and octroi payments receipts in respect of the said transactions. The AO also issued notices u/s 133(6) to the various suppliers but the same were returned unserved. Finally after considering various contentions and submissions of the assessee and rejected the same. Finally the AO disallowed and added a sum of ₹ 1,82,36,619/- relating to bogus purchases to the total income of the assessee by assessing income at ₹ 1,89,01,350/- vide order passed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower authorities. 3.3. After hearing the ld. DR and on perusal of the material available before us, we find that the assessee has availed accommodation entries for bogus purchases from various hawala dealers as pointed out and published by the Sales Tax Department of GOM. We find that the assessee could not produce any documentary evidences to prove the genuineness of the purchases and even the notice sent u/s 133(6) of the Act were returned unserved but simultaneously, we find that the AO has not doubted the sales out of materials purchased by the assessee from these hawala operators which means that the assessee purchased the material from the gray market thereby making savings of taxes like VAT octroi etc. These purchases and sales were duly recorded in the books of accounts of the assessee. The co-ordinate benches of the Tribunal in similar cases have been taking a consistent view in such cases by upholding the disallowance @ 12.5% of such unverified purchases towards various savings and leakages of revenue. Accordingly, we set aside the order of ld.CIT(A). The AO is directed to apply 12.5% on the alleged bogus purchases. 3.4. Resultantly, assessee s appeal is partly allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 . 3 . 3 In the instant case, the appellant had provided ample documentary evidence to establish purchase as genuine . The AO has rejected the same on mere suspicion, without bringing any findings of facts on record . Suspicion of the highest order cannot take place of evidence . Respectfully, following the ratio of judgments cited above, addition of Rs . 38,53,857 /- as unexplained expenditure u / s 69C is deleted . This ground of appeal is allowed 5.2. After hearing the rival parties and perusing the material available before us, we find that the assessee has specifically submitted to the AO that M/s Shree Sundha Steel Pvt Ltd from whom the purchases of ₹ 25,96,500/- were made was not declared a hawala dealer by the VAT Deptt GOM and the necessary documents were also filed before the AO. The AO, without making any observations on the said submissions added the entire purchase of ₹ 25,96,500 from the said supplier besides making additions qua the purchases from 5 other hawala suppliers. The ld.CIT(A) deleted the entire addition by upholding that the assessee has filed necessary documents and evidences to prove the genuineness of purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he explanations and submissions and various contentions raised during the assessment proceedings, disallowed the purchases to the tune of ₹ 57,90,015/- from Chetan Chemical Corporation. In the appellate proceedings, the ld.CIT(A) partly allowed the appeal by restricting the addition to ₹ 9,26,402/- being 16% of total purchases of ₹ 57,90,015/- by following the decision of predecessor in Appeal No.CIT(A)-31/IT-155/ITO-20(2)/13-14 for the assessment year 2010-11 dated 10.2.2015. 7.2. After hearing the ld.DR and on perusal of the material placed before us, we find that the ld.CIT(A) has passed order in the present case also after considering the various contention and submissions as made before the appellate authority and after following the decision of his predecessor for the assessment year 2010-11. In the present case GP applied by the ld. CIT(A) is quite reasonable under the present facts and circumstances of the case as the AO has not doubted the sales of the assessee and the assessee has also produced stock register, bills and vouchers and stock register in support of its claim before the AO. In our opinion the ld.CIT(A) has passed a very reasonable order by ..... 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