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ITO 19 (2) (5) , Mumbai Versus Smt. Pankhidevi N. Doshi

2018 (1) TMI 506 - ITAT MUMBAI

Bogus purchases - purchases from grey market - profit estimation - Held that:- The assessee had not carried out any genuine purchase transactions from the aforementioned parties, but then the fact that the corresponding sales of the goods under consideration stood duly accounted for in the books of accounts of the assessee, had not been doubted by the lower authorities. We are of the considered view that now when the sales of the goods under consideration have duly been routed through the books .....

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ds of the assessee to the extent of the profit margin relatable to aggregate value of the purchases under consideration. We further find that no infirmity emerges on the part of the CIT(A) by adopting the profit margin at the rate of 12.5% by relying on the judgment of CIT Vs. Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) - Decided against revenue - I.T.A. No.2507/Mum/2017 - Dated:- 13-9-2017 - SHRI RAJENDRA, AM AND SHRI RAVISH SOOD, JM For The Revenue : Shri M.V. Rajguru, Sr. D. R Fo .....

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her the Ld. CIT (A) was justified in sustaining only an addition ©12.5% profit rate on total purchases of ₹ 61,50,710/- made from 2 parties of a group concern of M/s. Bhanwarlal group of companies, who were in the business of providing accommodation entries as established by the investigating wing consequent to search action u/s 132 of the I.T. Act, 1961. 2. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) was justified in sustaining only an addition © .....

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e set aside and that of the Assessing officer be restored. 2. Briefly stated, the facts of the case are that the assessee who is engaged in the business of trading in ferrous and non-ferrous metals had filed her return of income for A.Y 2011-12 on 29.01.2011, declaring total income of ₹ 4,45,245/-. The A.O was in receipt of information from the DGIT(Inv.), Mumbai, therein intimating that as per the information received from the Sales Tax Department, Government of Maharashtra, it emerged th .....

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s purchase details, however, the assessee though filed part information but failed to produce the account books and the stock register. The A.O observed that a perusal of the purchase and sales details produced by the assessee revealed that the same could not be matched. It was further observed by the A.O that despite the fact that the assessee had total turnover of 3.02 crore, but however no expenditure was booked under the head transportation charges and freight charges. The assessee further f .....

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ocuments, however, the assessee except for placing on record the copy of the ledger accounts and stressing on the fact that the payments towards the purchase consideration were made to the aforementioned parties vide cheques, failed to produce any other supporting documentary evidence, viz. delivery challans, lorry receipts, transportation details etc. The A.O in the backdrop of the aforesaid facts concluded that the assessee had failed to discharge the onus as stood cast upon her in respect of .....

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tained accommodation bills from the aforementioned parties. The A.O thus after rejecting the claim of the assessee that it had made genuine purchases from the aforementioned parties, therein concluded that though it remained as a matter of fact that the assessee had not purchased the goods from the aforementioned parties, but the goods under consideration had in fact entered the assessee s regular business premises. The A.O thus being the view that as the assessee had failed to give any evidence .....

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rieved with the order passed by the A.O carried the matter in appeal before the CIT(A). The CIT(A) after deliberating on the contentions of the assessee in the backdrop of the facts of the case, therein concluded that it remained as a matter of fact that the assessee had failed to substantiate the genuineness and veracity of the purchases transactions which were claimed by her to have been made from the aforementioned parties, which were categorized by the Sales Tax Department, Government of Mah .....

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he CIT(A) thus in the backdrop of his aforesaid observations concluded that now when the corresponding sales of the goods under consideration were not doubted, therefore, the addition in the hands of the assessee was liable to be restricted to the amount of profit margin which the assessee had generated from making the purchase from the open/grey market. The CIT(A) thus on the basis of his aforesaid view relied on the judgment of the Hon ble High Court of Gujarat in the case of CIT Vs. Simit P. .....

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appeal as per Rule 25 after hearing the appellant revenue. The ld. Departmental Representative (for short D.R ) during the course of hearing of the appeal relied on the order passed by the A.O and averred that in the backdrop of the facts involved in the case, the A.O had rightly made an addition of the entire amount of bogus purchases in the hands of the assessee. It was submitted by the ld. D.R that the CIT(A) had erred in restricting the addition to 12.5% of the aggregate value of bogus purch .....

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