TMI Blog2017 (11) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment was framed u/s.143(3). Thus, the average GP rate works out to 5.87% against which during the year under consideration assessee has declared GP rate of 8.15% which is much better than the GP rate declared in other years and for which assessment was framed under scrutiny assessment u/s.143(3). Keeping in view totality of facts and circumstances of the case, we restrict the addition to the extent of 2% of the GP in respect of the alleged bogus purchases. We direct accordingly. - ITA No.4439/Mum/2016 And ITA No.3500/Mum/2016 - - - Dated:- 23-11-2017 - SHRI R.C.SHARMA, AM AND SHRI RAVISH SOOD, JM For The Revenue : Shri Rajat Mittal For The Assessee : Shri Rushabh Mehta ORDER PER R.C.SHARMA (A.M): Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own surmises and conjectures without bringing on record any material to justify such estimated disallowance. 3) Without prejudice to above, the learned CIT(A) erred in facts and law in disallowing 12.5% of the alleged bogus purchases without appreciating that the disallowance, if any called for, was to be restricted based on the adoption of average gross profit worked out over the last 5 years and that offered by the assessee in the return of income for the year under consideration. 4) Without prejudice to above, the learned C1T(A) erred in facts and law in directing the learned Assessing Officer to disallow 12.5% of the VAT element of ₹ 8,24,993/- embedded in alleged purchases ignoring the fact that VAT account is separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: As per information the purchase bills of few suppliers of the assessee company who appeared in the List of Suspicious Dealers who has issued false bills without delivery of goods . These suppliers are as under who supplied only bills to the assessee company for the period relevant to assessment years 2011-12. 9. In this regard, reliance is placed on the decision of the Hon ble Delhi High Court in the case of Pr. CIT v. Meenakshi Overseas Pvt. Ltd. (ITA No. 692 of 2016) (Del.) wherein it has been held that there should be a live link between the tangible material and the formation of the reason to believe that income has escaped assessment. 10. With regard to merit of the addition, the contention of learned AR was that va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effected by the assessee; the Id. Assessing Officer made the addition of alleged bogus purchases. 12. However, the Id. CIT(A) considered assessee s submission partly and sustained disallowance to the tune of 12.5% of these alleged purchases. Whatever details were called for by the Id. Assessing Officer in the alleged purchases were furnished by the assessee and nothing adverse was found therein by the Id. Assessing Officer. 13. Further, no statements / affidavits are also provided by the Id. Assessing Officer which goes against the assessee, though referred by the Id. Assessing Officer at Para 5.2, Page No. 2 of the assessment order, which is also in violation of provisions of section 142(3) of the Act. Even, no cross examination has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arefully and gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us, in the context of factual matrix of the case. 19. From the record we found that on the basis of information from Sales Tax Department, AO concluded that purchases made from suspicious dealers were not genuine, accordingly he added the entire amount of purchases by invoking provisions of Section 69C. 20. By the impugned order CIT(A) after relying on the decision of the Gujarat High Court in the case of Simit P Shah 356 ITR 451 restricted addition to the extent of 12.5% of the disputed bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... current Gross rate Profit offered by the assessee in the year under consideration is 8.15%. 23. We found that GP rate in the A.Y.2012-13 was 5.39% and the assessment was framed u/s.143(3). In the A.Y.2013-14 it is 6.10% and in 2014-15 6.11% when the assessment was framed u/s.143(3). Thus, the average GP rate works out to 5.87% against which during the year under consideration assessee has declared GP rate of 8.15% which is much better than the GP rate declared in other years and for which assessment was framed under scrutiny assessment u/s.143(3). Keeping in view totality of facts and circumstances of the case, we restrict the addition to the extent of 2% of the GP in respect of the alleged bogus purchases. We direct accordingly. 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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