TMI Blog2017 (12) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... ls are taken up and disposed of by way of a common order. We first take up the appeal for AY: 2009-10, wherein the revenue assailing the order of the CIT(A) had raised before us the following grounds of appeal:- i. On the facts and circumstances of the case and in law the CIT(A) erred in restricting the addition on account of peak credit of bogus purchases to 12.5% of the bogus purchases and thereby deleting the addition of ₹ 2,69,30,806/- without appreciating the fact that the assessee could not produce any evidence in support of purchases during the course of either survey conducted at its premises or assessment proceedings. ii. On the facts and circumstances of the case and in law the CIT(A) erred in restricting the addition on account of peak credit of bogus purchases to 12.5% of the bogus purchases without appreciating that method of peak credit adopted by the Assessing Officer was the most appropriate method to avoid double addition and to bring the actual income of the assessee where there are large number of unexplained credit and debit entries. 2. The appellant craves to add, to amend and/ or alter any grounds of appeal, if need to be. 3. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has obtained bogus purchases to inflate the expenses. 3. That during the course of the survey proceedings the statement of Shri Dilip Vijayraj Parmar, director of the assessee company was recorded under oath on 27.11.2012. The A.O while framing the assessment observed that the director of the assessee company had accepted in his aforesaid statement that the purchases of the assessee company for AY: 2009-10 to AY: 2011-12 were inflated by an amount aggregating to ₹ 12,77,22,576/- in the books of account , and had offered the same for tax. That during the course of the assessment proceedings the A.O called upon the assessee to place on record the documentary evidence in the form of purchase order, gate pass, MRN/GRN, weighment bridge slips, lorry receipts, goods receipt notes, delivery challans, octroi receipts, transportation invoices, stock register etc, and also to produce the respective parties from whom the purchases were made, viz. (i) M/s Manav Impex; (ii) M/s Navpad exports Pvt. Ltd.; and M/s Saileela Trading Pvt. Ltd., so that the genuineness and veracity of the purchase transactions may be proved beyond any scope of doubt. The assessee in reply to the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchases and also the sales made with such parties were not genuine. The statement of the supplier parties were confronted to the director of the assessee company for rebuttal, however, no comments were advanced by him in respect of the same. The CIT(A) observed that the assessee had during the course of the assessment proceedings claimed that its purchases and sales were genuine transactions and were duly accounted for in the books of accounts. It however came to the notice of the CIT(A) that the director of the assessee company had during the course of the survey proceedings filed an affidavit dated 11.03.2015, retracting his earlier statement on the ground that at the time of recording of the statement he was in stress and confused state of mind. It was claimed by the assessee that the goods purchased from the aforementioned supplier parties under consideration were sold to genuine customers, and in a similar manner the sales made to the aforementioned parties were sourced from genuine suppliers. It was thus the contention of the assessee before the CIT(A) that while for the sales of the goods purchased from the aforementioned parties stood duly recorded in the books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions made in the hands of the assessee on the said basis. The CIT(A) after deliberating on the case records held a strong conviction that it remained as a matter of fact that the assessee had not made any genuine transactions with the aforementioned parties which had been declared as hawala dealers by the Sales tax department. The CIT(A) observed that the A.O in his remand report dated 27.02.2012 had stated that following the judgment of the Hon ble High Court of Gujarat in the case of Simit P. Sheth (supra), the suppressed profit of the assessee on the bogus purchases may be estimated at the rate of 12.50%. The CIT(A) thereafter arrived at a material observation that the finding of the A.O in the assessment order and also in the remand report clearly established that there was no dispute with regard to purchase and sales of goods made by the assessee, however, the only dispute was with regard to the fact that such purchase and sale of goods had not been made from the parties declared as hawala parties by the sales tax department. The CIT(A) thus restricting the issue to the estimation of the profit element embedded in making of such bogus purchases by the assessee from the open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called for by the CIT(A), had categorically placed reliance on the judgment of the Hon ble High Court of Gujarat in the case of CIT Vs. Simit P. Sheth (2013) 356 ITR 451 (Guj) and submitted that in the backdrop of the aforesaid judgment the income of the assessee may be estimated at the rate of 12.5% of the aggregate of the bogus purchases, viz. purchases claimed by the assessee to have been made from the hawala parties. We find that though the assessee had submitted before the CIT(A) that the estimation of profit in the hands of the assessee in light of the lower VAT rate of 4% applicable in its trade line may be adopted, but however, the CIT(A) observed that the Hon ble High Court of Gujarat had made an adhoc disallowance in respect of bogus purchases at the rate of 12.5% without referring to the Sales Tax rate applicable in respect of trade line of the assessee before them. The CIT(A) thus on the basis of his aforesaid observations restricted the addition in the hands of the assessee to 12.5%, as was suggested by the A.O in his remand report . 9. We have given a thoughtful consideration to the facts of the case and are of the considered view that now when the A.O himself ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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