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TMI Blog2018 (7) TMI 1723X X X X Extracts X X X X X X X X Extracts X X X X ..... company which is engaged in the business of dealing in computer peripherals and other electronic items had filed its return of income for A.Y 2009-10 on 30.09.2009, declaring total income of Rs. 1,35,46,240/-. On the basis of information received from the Sales tax department through the Director General of Income tax (Investigation), Mumbai, that the assessee had made bogus purchase of Rs. 1,01,67,848/- during the year under consideration from the following parties: Sr. No. Name of the concern PAN F.Y. Amount (Rs.) 1. Shreeji Nakodji Impex ABFPY2160B 2008-09 44,03,001/- 2. Sivamani Traders Pvt. Ltd. AAKCS4401J 2008-09 57,62,647/- 3. Keligare BNVPS8501D 2008-09 2,200/- Total amount of bogus purchases - 1,01,67, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oices/delivery challans and other documents as were furnished by the assessee with him was however not inspired as regards the genuineness of the same for the following reasons: "(i) The very reason of reopening the case of the assessee is that such parties have been found to be non-genuine by the Sales Tax Department, and their TIN (which is so depicted on the invoices) has been cancelled. Thus, the TIN and its genuineness cannot be admitted as conclusive evidence of the existence of the party making the sale. (ii) Notices sent to the address given in the invoice/delivery challan have returned back unserved. Also, the inquiry conducted by the Inspector of Income Tax (as explained in paragraphs above), has yielded that no such party ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusive on the matter. It throws no light on the purpose for which this material/purchase was utilized. There was no conf irmation f iled from the ostensible recipient of this purchase namely the customer. Needless to say, this is another attempt at clothing this sham transaction with a genuine robe. An entry in a register will not salvage the assessee's case when all other facts point otherwise. (viii) In the instant case, the assessee, in his audited accounts, has asserted that he has made purchases from the parties mentioned earlier. As mentioned earlier, the burden of proving the same lies on him. He has been confronted with all evidence that undoubtedly points towards the purchases being bogus. He has been provided full opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 6% on the value of the bogus purchases of Rs. 1,01,67,848/- and resultantly sustained the addition to the extent of Rs. 6,10,071/-. 6. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Departmental Representative (for short 'D.R') at the very outset of the hearing of the appeal submitted that the CIT(A) had on the basis of a non-speaking order restricted the addition to the extent of 6%. It was submitted by the ld. D.R that as the assessee had failed to substantiate the genuineness and veracity of the purchases which were claimed to have been made from the aforementioned parties, thus the A.O had rightly disallowed the entire value of the impugned purchases of Rs. 1,01,67,848/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said money had found its way back to the pocket of the assessee, also evidences the fact that the assessee had made the purchase of the goods under consideration, though not from the aforementioned parties, but from the open/grey market. We thus, are of the considered view that as the sales of the assessee had not been dislodged by the A.O, therefore, as observed by us hereinabove, it can safely be concluded that the assessee had made purchases of the goods under consideration. In the backdrop of our aforesaid observations it can safely be concluded that as the assessee had purchased the goods under consideration from the open/grey market, thus the addition in its hands was liable to be restricted only to the extent of the profit eleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the regular market and booked by the assessee in its books of account, would have to be subjected to a process of estimation. We are of the considered view that in all fairness the extent of inflation of the purchase price by the assessee by procuring bogus purchase bills from the aforementioned parties, as held by the Hon'ble High Court of Gujarat in the case of Simit P. Sheth (supra), can safely be taken at 12.5%. We thus, set aside the order of the CIT(A) and sustain the addition to the extent of 12.5% of the aggregate value of bogus purchases of Rs. 1,01,67,648/- claimed by the assessee to have been made from the aforementioned parties. We thus, in terms of our aforesaid observations sustain the addition in respect of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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