TMI Blog2017 (9) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... hen asked the assessee to produce the above parties for examination in person to establish their identity and substantiate the claim of purchases from those parties. The assessee however, failed to produce those parties for examination in person. Also we find that barring the ledger account and cheque payments, no other documents such as octroi receipts, transport bills were produced before the AO by the assessee during the course of assessment proceedings. In the case of CIT vs. Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT), has held that where purchases were not bogus but were made from parties other than those mentioned in the books of account, not entire purchase price but only profit element embedded in such purchases can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the appeal. Having gone through the affidavit filed, we find that there was reasonable cause in delay in filing the appeal. The delay in filing the appeal is therefore condoned. 3. The grounds of appeal for the AY 2010-11 AY 2011-12 are same. Only the addition made by the Assessing Officer (AO) towards the alleged bogus purchases differs. The amount is ₹ 19,88,227/- for AY 2010-11 and ₹ 21,18,170/- for AY 2011-12. We take up the grounds of appeal filed by the assessee for the AY 2010-11 which read as under: - 1. The Commissioner of Income tax, Appeals 2, Thane had erred in confirming the reopening of the Assessment u/148 and rejecting the legal point raised by the Appellant with regard to issuance of notice u/s 148 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation 27210156439V 2010-11 252179 4. M/s Nikhil Enterprises 27450374751V 2010-11 107488 5. M/s N B Enterprises 27490339033V 2010-11 113523 Total 1988227 The assessee requested the AO to provide a copy of the satisfaction for re-opening of assessment. The AO sent a reply to the assessee along with the documentary evidence supplied by the Sales Tax Department. In order to ascertain the genuineness of the above purchases, the AO called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of the AO and upheld the disallowance of hawala purchases of ₹ 19,88,227/-. However, regarding the further disallowance of ₹ 28,07,877/-, the Ld. CIT(A) after verification observed that except petty expenses, the assessee had maintained verifiable vouchers and payment had been made through banking channels. Therefore, he restricted the disallowance to 5% which comes to ₹ 1,40,395/-. 6. Before us, the Ld. Counsel of the assessee files a Paper Book (P/B) containing (i) Authority Letter, (ii) Application for Condonation of delay, (iii) Copy of Audited Balance Sheet, (iv) Copy of Tax Audit Report, (v) Ledger extracts of alleged Hawala parties, (vi) Copies of bills of alleged Hawala Parties along with delivery challan of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the return is processed u/s 143(1), the only condition to be satisfied for reopening is taxable income has escaped assessment and the assessee s plea that no fresh material before the AO warranting reopening is not relevant. In the instant case there was specific information before the AO from the Sales Tax Department, Maharashtra about the assessee who obtained bogus purchase bills from the accommodation entry providers. Therefore, the AO has rightly reopened the assessment by issuing notice u/s 148 of the Act. In view of the above, the 1st ground of appeal is dismissed. 8.1 Now we turn to the 2nd ground of appeal. We find that to ascertain the genuineness of the unverifiable purchases, the AO called for information u/s 133(6) fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to make an addition of ₹ 2,48,528/- in place of ₹ 19,88,227/- in AY 2010-11 and ₹ 2,64,771/- in place of ₹ 21,18,170/- in AY 2011-12. 8.2 We now come to the 3rd ground of appeal. We find that the Ld. CIT(A) has restricted the disallowance of the other expenses to 5% on the reason that the appellant had maintained the verifiable vouchers and payment had been made through banking channels in majority of cases, except petty expenses. We find that the above estimated disallowance is not supported by the material on record. Therefore, the disallowance of ₹ 1,40,395/- for the AY 2010-11 and ₹ 2,00,162/- for AY 2011-12 arrived at by the Ld. CIT(A) are deleted. 9. In the result, the appeals are partly all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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