TMI Blog2017 (11) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that it has paid additional VAT on purchases from those six parties. Hence we set aside the issue to the file of the AO for the limited purpose of verification whether the assessee has paid additional VAT on purchases from those six parties on denial of input tax credit by Sales-tax department. If the claim of the assessee is found to be correct, then the AO is directed to allow credit for payment of VAT on purchases from those six parties out of net profit determined on the alleged bogus purchases. - I.T.A No.2952/Mum/2016 - - - Dated:- 27-10-2017 - Shri Mahavir Singh (JUDICIAL MEMBER) And Shri G Manjunatha (ACCOUNTANT MEMBER) For The Appellant : Ms. Ruchi M Rathod For The Respondent : Shri Ram Tiwari ORDER Per G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount u/s 145(3) and estimated net profit at 25% on total bogus purchases from above six parties. 3. Aggrieved by the assessment order, the assessee preferred appeal before CIT(A) and reiterated its submissions made before the AO. The assessee further contended that the AO was erred in estimating net profit at 25% of the alleged bogus purchases. The assessee also contended that the AO has not pointed out any discrepancy in stock registers or make out any case of sales made outside the books of account. The AO never disputed sales declared by the assessee. In the absence of any incorrectness in the books of account, it is incorrect on the part of the AO to treat purchases from above parties as bogus, merely on the basis of information rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR, on the other hand, strongly supported the order of CIT(A). 6. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The AO has estimated net profit of 25% on total alleged bogus purchases from six parties on the ground that the purchases from those parties were bogus in nature as the parties were involved in providing accommodation entries. According to the AO, though the assessee has furnished purchase bills and payment proof, failed to furnish further evidences like lorry receipts, weighment slips and excise gate pass to prove the genuineness of purchases. The assessee contends that net profit determined by the CIT(A) is on higher side when compared to the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared by the assessee. In the absence of any incorrectness in books of account or stock details, addition cannot be made towards bogus purchases on the basis of information received from Investigation Wing. Under these facts, what needs to be taxed is only the profit element embedded in such purchases. Various Courts and Tribunals, in case of bogus purchases have taken a consistent view that only the profit element embedded in such purchases needs to be taxed. The Ahmedabad Bench of the Tribunal, in the case of CIT vs Vijay Proteins Ltd 58 ITD 428 (Ahd), under similar set of facts, directed the AO to estimate net profit of 12.5%. In the case of CIT vs Simit P Sheth (supra), the Hon ble Gujarat High Court observed that no uniform yardsti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed notice of demand and assessment order passed by VAT authorities alongwith payment details to justify additional payment of VAT on those purchases. Therefore, we are of the view that the issue needs to be examined by the AO in the light of the claim of assessee that it has paid additional VAT on purchases from those six parties. Hence we set aside the issue to the file of the AO for the limited purpose of verification whether the assessee has paid additional VAT on purchases from those six parties on denial of input tax credit by Sales-tax department. If the claim of the assessee is found to be correct, then the AO is directed to allow credit for payment of VAT on purchases from those six parties out of net profit determined on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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