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TMI Blog2018 (5) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... as reduced to Rs. 3,30,450/- in revised return. The return was processed u/s 143 (1) of the Act. 3. Subsequently, on the basis of information received from Sales Tax Department and Director General of Income Tax (Inv.) (DGIT), Mumbai that during the year relevant to the assessment year under consideration some businessmen including the present appellant/assessee had indulged in obtaining bogus purchase bills from bogus parties, the assessment was re-opened by issuing notice u/s 148 of the Act. In reply to the notice u/s 148, the assessee requested to treat the revised return as return of income in response to the said notice. Further, in response to notice u/s 143 (2) and 142 (1) of the Act, the authorized representative appeared before the AO and furnished the details including purchase invoice ledger account, delivery challan, copy of bank statements etc. 4. It was noticed that the assessee had shown purchase of Rs. 5,73,102/- from P.M. Steel Alloys and Shri Manibhadra Metal Corporation during the previous year. Since, the aforesaid entities were bogus parties as per the information, AO issued notices u/s 133 (6) of the Act to the aforesaid parties, however, the notices were re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and bad in law. 3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal and that too without appreciating fully and properly the facts of the case. 4. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in upholding the action of the A.O. in adding an amount of Rs. 1,43,245/- as disallowance out of purchase.' 5. "On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in upholding the action of the A.O. in adding an amount of Rs. 54,000/- as on account of interest expenses'. 6. "On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in upholding the action of in adding an amount of Rs. 32,007/- as 'addition on account of various heads of expenses." 9. Before us, the Ld. counsel for the assessee submitted that the assessee does not want to press ground No. 1 to 3 being general in nature. We accordingly dismiss ground no. 1 to 3 of the appeal as not pressed. 10. Ground No. 4 of the appeal pertains to addition of Rs. 1,43,245/-, which is 25% of the total amount of bogus purchases. The Ld. counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly upheld the decision of the Tribunal and sustained the addition 12.5% of the total bogus purchases. In the present case since, the AO has not rejected the sales made by the assessee during the previous year, there is no reason to hold that purchases were not made at all. Hence, following the ratio laid down by the Hon'ble Gujrat High Court in CIT vs. Simit P. Seth (supra) we partly allow this ground of appeal of the assessee and accordingly modify the order of the Ld. CIT (A) and restrict the addition to 12.5% of the total amount of bogus purchases. AO is directed to make addition of 12.5% of the total amount of bogus purchases is made by the assessee during the previous year. 13. Vide Ground No. 5 the assessee has challenged the action of the Ld. CIT (A) in upholding the addition of Rs. 54,000/- on account of excess interest paid to the related parties on the borrowings. The Ld. counsel for the assessee submitted that the Ld. CIT (A) has wrongly confirmed the addition made by the AO. The assessee had obtained unsecured loan from the related parties because the assessee was not in a position to take loan from the banks or other financial institutions. Accordingly, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Vide Ground No. 6 the assessee has challenged the findings of the Ld. CIT (A) in upholding the action of AO of making addition of Rs. 32,007/- which is 20% of the total amount of expenses claimed by the assessee. The Ld. counsel contended that Motor Car expenses, depreciation thereon, expenses on staff welfare, telephone expenses and sundry expenses claimed by the assessee, have been incurred exclusively for the purpose of the business therefore the Ld. CIT(A) ought to have deleted the addition made by the AO on account of ad-hoc disallowance of 20% made on the miscellaneous expenses claimed by the assessee. 17. On the other hand, the Ld. DR relying on the findings of the Ld. CIT(A) submitted that since the assessee has failed to produce any evidence in support of its claim, the Ld. CIT(A) has rightly confirmed the addition made by the AO. 18. We have perused the evidence on record in the light of the rival contentions of the parties. The Ld. CIT (A) has confirmed the addition on the ground that the assessee has failed to discharge the onus to prove the genuineness of such claim. The AO has pointed out that entries in the ledger are not supported by any bills or vouchers. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 1. "On the facts and in the circumstances of the case and in law, the proceedings initiated u/s 147 of the Act is invalid and bad in law. 2. "On the facts and in the circumstances of the case and in law, the assessment order passed u/s 143 (3) r.w.s. 147 is invalid and bad in law. 3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal and that too without appreciating fully and properly the facts of the case. 4. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in upholding the action of the A.O. in adding an amount of Rs. 3,47,843/- as 'disallowance out of purchase.' 5. "On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in upholding the action of the A.O. in adding an amount of Rs. 54,000/- as on account of interest expenses'. 6. "On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in upholding the action of the A.O. in adding an amount of Rs. 37,995/- as out of expenses. 7. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in upholding the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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