TMI Blog2018 (7) TMI 1723X X X X Extracts X X X X X X X X Extracts X X X X ..... in comparison to the price for which the same would be available in the regular market and booked by the assessee in its books of account, would have to be subjected to a process of estimation. 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%. - ITA No. 680/Mum/2017 - - - Dated:- 26-7-2018 - SHRI G. MANJUNATHA, AM AND SHRI RAVISH SOOD, JM For The Revenue : Shri Rajat Mittal, D.R For The Assessee : Shri Narayan Atal, A.R ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present appeal filed by the revenue is dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of the assessment proceedings the assessee was called upon to substantiate the genuineness and veracity of the purchase transactions which were claimed to have been made from the aforementioned parties. However, the details placed on record by the assessee to prove the genuineness of the purchase transactions under consideration did not find favour with the AO. Still further, as the A.O despite best of his efforts could not obtain the confirmations from the aforementioned parties in exercise of his powers under Sec.133(6) of the Act, therefore, he called upon the assessee to produce them for necessary examination. Despite specific directions, the assessee not only failed to produce the aforementioned parties, but also did not plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be considered as genuine for the want of verifiability. ( iii) Whether the materials were really supplied or not i.e. whether there was an actual delivery of Goods or not, cannot be ascertained. The invoices and delivery challans so produced do not carry the seal/stamp check-post or the Commercial Tax Department to enable the A.O to conclude that physical delivery of goods actually took place. ( iv) Despite giving reasonable opportunity, the assessee has been unable to produce the party which made the sale. As such, the signatures also cannot be verified. ( v) The assessee has submitted that he has made all payments through account payee cheques and reflected in assessee s bank accounts. It may be reiterated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to discharge this burden by way of bringing any incontrovertible evidence on record in support of his claim. 4. It was further observed by the A.O that as none of the aforementioned parties could be located, hence it could safely be concluded that neither the said parties were genuine nor any purchases were made by the assessee from them. On the basis of his aforesaid deliberations, the A.O being of the view that the assessee had failed to discharge the onus as was cast upon it to substantiate on the basis of clinching evidence the genuineness and veracity of the purchase transactions under consideration, thus disallowed the entire purchases of ₹ 1,01,67,848/- claimed by the assessee to have been made from the aforementioned pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. Alternatively, it was submitted by the ld. D.R that even if the addition was liable to be restricted only to the extent of the profit element, the same as held by the Hon ble High Court of Gujarat in the case of Simit P. Sheth (2013) 356 ITR 451 (Guj) should not have been less than 12.5% of the aggregate value of such bogus purchases. Per contra, the ld. Authorized Representative (for short A.R ) relied on the order of the CIT(A). 7. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We are of the considered view that though it remains as a matter of fact that the assessee could not substantiate its claim of having made the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of such purchases. We thus, in terms of our aforesaid observations are of the considered view that the CIT(A) had rightly restricted the addition in the hands of the assessee to the extent of the profit element involved in making of such bogus purchases by the assessee. However, we are unable to persuade ourselves to accept the quantification of the profit element as carried out by the CIT(A) in respect of the impugned purchase transactions. We find that the CIT(A) had restricted the addition to the extent of the gross profit rate of 6% as was shown by the assessee in its regular books of account for the year under consideration. We are of the considered view that the profit element involved in procuring of the goods at a lower/concession ..... X X X X Extracts X X X X X X X X Extracts X X X X
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