TMI Blog2017 (9) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... der construction. In that case, there is merit in the submission of the assessee that the profit amount computed at 8% of the value of alleged bogus purchases should go to reduce the value of work in progress. Accordingly we direct the AO to reduce the profit amount so computed from the value of work in progress, instead of assessing the same during the year under consideration. Appeal filed by the revenue is dismissed and the cross objection of the assessee is partly allowed. - I.T.A. No. 1769/Mum/2016 And C.O. No. 192/Mum/2017 - - - Dated:- 31-8-2017 - Shri B.R. Baskaran (AM) And Shri Pawan Singh (JM) For The Assessee : Shri Rakesh Joshi For The Department : Shri M.C. Omi Ninegshen ORDER Per Bench:- The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties identified by the Sales Tax Department as involved in providing accommodation bills. The Assessing Officer issued notices u/s. 133(6) of the Act to those parties, but all of them were returned back by the postal authority. According to the Assessing Officer the assessee did not furnish reconciliation of purchases. Hence the Assessing Officer took the view that the purchases made from the above said parties are bogus and accordingly disallowed the same and added ₹ 584.43 lakhs to the total income of the assessee. 5. Before the learned CIT(A), the assessee submitted that it is offering income under percentage of complete method in respect of construction activity. It further submitted that all these purchases have been included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book results and hence the impugned addition was not justified. The assessee also submitted that it has been showing net profit in the range of 11% which is comparable with the industries standard. It was submitted that the assessee has declared net profit of 22.72% after including the additional disclosure of 5.01crores. 7. The learned CIT(A), upon considering the arguments and evidences, took the view that the Assessing Officer was not justified in adding entire alleged bogus purchases. The learned CIT(A) also took the view that the profit element embedded in the alleged bogus purchases should only be added. Accordingly, he directed the Assessing Officer to make addition of 10% of the alleged bogus purchases with the following observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of a statement of seller who was never cross examined by the assessee. It is also noted that the items purchased were used as input into assessee's product for sales which have been accepted by the department. 6.4 It is noted that only profit element is liable to tax in such cases as was held in the case of : 1. CIT vs. Bholanath Poly Fab Ltd. (2013) 355 ITR 290 (Guj)(HC) 2. CIT v Simit P. Sheth (2013) 356 ITR 451 (Guj) (HC) 3. CIT vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (HC) 4. ITO vs. Permanand (2007) 107 TT3 395 (Jd)(Trib.) 5. Shri Madhukant B. Gandhi vs. ITO ITA No. 1950/M/2009 Bench 'B' dt. 23-02-2010 (AY 2005-06) (Mum.)(Trib.) 6. Sanjeev Woolen Millis Vs. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... results. It was submitted that the assessing officer has made the addition by simply relying upon the statement given by the suppliers before the Sales tax Authorities without making any independent enquiry. The Ld A.R submitted that the AO did not furnish copies of those statements and also did not afford opportunity of cross examination. Accordingly it was contended that the entire addition should be deleted. 10. However, we are unable to fully agree with the contentions of the assessee. The assessing officer has issued notices u/s 133(6) of the Act and all the notices have been returned back by the postal authorities un-served. We also notice that the assessee did not obtain any confirmation letter from the suppliers nor did it produ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
