TMI Blog2018 (10) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case the sales were not disputed and the method of accounting followed by the assessee is project completion, therefore, we are inclined to estimate the profit on the above purchases at 3%. Accordingly appeal of the assessee is partly allowed without deciding the issue technically and legally. Thus we are inclined to follow the order of the Tribunal in assessee’s group case and direct the Assessing Officer to restrict the disallowance of purchases @3%. - decided partly in favour of assessee. - ITA NOs. 4065, 4066 & 4067/MUM/2017, ITA NOs. 4339, 4340 & 4341/MUM/2017 And ITA NO.90/MUM/2018 - - - Dated:- 10-10-2018 - SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, HON'BLE ACCOUNTANT MEMBER For The Assessee : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of VAT/Sales Tax by the vendors does not mean that assessee has not incurred any cost for the materials purchased or sold by them to the assessee. Not convinced with the submissions of the assessee, the Assessing Officer disallowed the entire purchases treating them as bogus. 4. On appeal the Ld.CIT(A) considering the submissions of the assessee and the remand report, rejoinder of the assessee and various case laws he estimated the profit from purchases @25% being the average profit shown by the assessee from its projects undertaken during the relevant Assessment Years. Against this order of the Ld.CIT(A) both the assessee and Revenue are in appeal before us. 5. For the Assessment Year 2010-11 there is no appeal by the Revenue. Coming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, Learned Counsel for the assessee submitted that following the said order the profit element from the purchases may be restricted to 3%. 6. Ld. DR vehemently supported the order of the Assessing Officer. Ld. DR submitted that the notices issued u/s. 133(6) of the Act were returned and the assessee could not produce the parties establishing the genuineness of the purchases. Ld. DR also submitted that movement of materials is not proved and the consumption is in doubt. Therefore, the Assessing Officer is justified in treating the entire purchases as bogus. 7. We have heard the rival submissions, perused the orders of the authorities below. In so far as the appeals of the Revenue for the Assessment Years 2008-09 2011-12 are concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also covered under Section 132 of the Income Tax Act, 1961 (hereinafter the Act ). The assessee had filed the original return of income on 27.06.2008 declaring an income of ₹.53,07,105/-. Notice under Section 153A of the Act was issued on 12.08.2011 and it was complied with by filing return of income on 26.09.2011 declaring the same income as in the original return. In para 8.1 of the assessment order the AO observed that the Sales Tax Department had busted a racket of bogus dealers who were engaged in providing accommodation bills/invoices to various traders/beneficiaries the details whereof were uploaded on the official website. He also mentioned that information was received from DGIT (Inv) Wing, Mumbai Pune regarding these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the CIT(A). 4. In the appellate proceedings the learned CIT(A) partly allowed the pleas of the assessee by observing and holding as under: - 48. Asst year 2008-09: The appellant has shown average profit of only 5% from the project Mahavir Ratan. The AO has also estimated profit @5% of the WIP in the next two years. But I think that is on a very low side. Considering various cases discussed above and the profit estimation confirmed in those cases, I think it reasonable to disallow 15% of the impugned purchases. Thus out of the disallowance of ₹.31,03,479/- addition is confirmed to the extent of ₹.4,65,000/-. Aggrieved assessee is in appeal before us. 5. The learned A.R. vehemently submitted before us t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills and, therefore, the action of the CIT(A) confirming 15% of the said purchase is reasonable and correct and be confirmed. 7. We heard the rival submissions and perused the material on record. We find that the assessee is undisputedly found to be beneficiary of bogus purchase bills which during the year were to the tune of ₹.31,03,479/- from three parties as published by the Sales Tax Department of Maharashtra on its official website. Moreover the AO received information from DGIT (Inv) Wing, Mumbai and Pune of the fact that the assessee is beneficiary of bogus purchase bills and is only receiving accommodation entries without receiving material physically. The assessee during the course of assessment proceedings has filed nec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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