TMI Blog2017 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ogus bills, the purchase are generally made from grey market and the assessee saves in the form of non payment of VAT and other incidental levies. Addition has be made on percentage basis in order to cover the leakages of revenue in such cases which the ld. CIT(A) has rightly done. Therefore, order passed by the CIT(A) sustaining the addition to the extent of 10% of bogus purchases to recover the revenue leakages is correct and needed to be upheld. We, therefore, inclined to confirm the order of CIT(A) by dismissing the appeal of the assessee. Levy of penalty u/s 271A - default committed u/s 44A - Held that:- In the present case, we find that the auditor of the company have not made any adverse comments on the books of account maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. At the out set, the ld.AR submitted that though in the grounds of appeal the assessee has taken the issue of re-opening of the assessment but now he do not wants to press the same. Accordingly, we dismiss this ground. 3. The sole issue raised by the assessee is against the confirmation of ₹ 6,01,430/- being 10% of bogus purchases of ₹ 60,14,350/- by ld. CIT(A) as against the 100% addition made by the AO u/s 69C of the Income Tax Act, 1961. 4. Facts of the case are the assessee filed return of income on 26.9.2010 declaring total income of ₹ 29,15,432 under the normal provisions of Act and ₹ 25,65,442/- under the provisions of section 115JB of the Act. The case was scrutinized and the assessment was framed vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28.3.2014 assessing the total income of the assessee at ₹ 1,00,16,980/-. In the appellate proceedings, the CIT(A) partly allowed the appeal of the assessee by sustaining the addition to the extent of 10% of the bogus purchases after considering the various submissions and contentions as raised by the assessee during the hearing before him vide para 5.22 of the appellate order which is reproduced below: 5.22. The rejection of book results is affirmed since the impugned purchases could not be proved to be genuine. The cross examination cannot be provided since the impugned parties are not produced by the appellant. In fact theappellant has confirmed in the appellate proceedings that there are no purchases from these partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notices issued to the parties u/s 133(6) were returned unserved. The ld.CIT(A) deleted the addition to the extent of 90%of the bogus purchases. We further noticed that the AO during the assessment proceedings accepted the sales which were made out of the hawala purchases. In a case where the assessee obtains bogus bills, the purchase are generally made from grey market and the assessee saves in the form of non payment of VAT and other incidental levies. In our opinion, the addition has be made on percentage basis in order to cover the leakages of revenue in such cases which the ld. CIT(A) has rightly done. Therefore, we are of the considered opinion the order passed by the ld.CIT(A) sustaining the addition to the extent of 10% of bogus pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 271A were not applicable to the assessee as the assessee was maintaining the regular books of accounts which were duly audited by the Auditors of the company. However, the reply of the assessee did not find favour with the AO and he levied penalty by holding that the assessee has committed default without reasonable cause vide order dated 29.9.2014 passed u/s 271A of the Act. In the appellate proceedings, the ld. CIT(A) upheld the order of AO by observing and holding as under : 5. The AO has rejected the books of accounts. The penalty is leviable for the failure of assess to keep, maintain or retain books of accounts, documents etc which enable the assessing officer to compute the income in accordance with the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained by the assessee and duly certified the books ofthe assessee. Under these circumstances, we are not in agreement with the conclusion drawn by the ld.CIT(A) that the penalty u/s 271A is rightly imposed by the AO. In view of the facts and circumstances of the case, we hold that the ld.CIT(A) has wrongly upheld the order of the AO. Therefore, we set aside the same and direct the AO to delete the penalty. Resultantly the appeal of the assessee is allowed. ITA No.6772 and 6773/Mum/2016 11. The issue raised in these appeals are identical to that of ITA No.1495/Mum/2016 except figures. In the said appeal the CIT(A) has sustained the addition to the extent of 10% of the bogus purchases and we have dismissed the appeal of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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