TMI Blog2019 (3) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... al to support the view so taken, it may not be proper to presume that unaccounted cash would have been introduced. Another important factor, which has been rejected by the AO is the submission of the assessee that they were getting credit period of 90 days for making payment to the suppliers. If the same is factored in, then the addition computed by the AO would go down drastically. CIT(A) was justified in directing the AO to assess the profit element embedded in the alleged bogus purchases by taking the rate of profit as 12.50%. As noted earlier, his view also gets support from the decision rendered in the case of Simit P Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. Hence we do not find any infirmity in the orders passed by him and accordingly we uphold the same. - Decided against revenue - 6826/Mum/17, 6827/Mum/17, 6851/Mum/17, 6828/Mum/17, 6829/Mum/17, 6830/Mum/17, 6831/Mum/17, 6832/Mum/17, 6833/Mum/17 And 6834/Mum/17 - - - Dated:- 8-3-2019 - Shri B.R. Baskaran, Accountant Member And Shri Ravish Sood, Judicial Member For the Appellant : Shri Narendra Jangpangi, CIT-DR For the Respondent : Shri Jayesh Kala, ORDER PEN BENCH: The Revenue has file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n viii. M/s. Tulsiani Trading Pvt. Ltd., ix. M/s. Paras Enterprises x. M/s. Centurion Sales Corporation xi. M/s. Rashmi Enterprises xii. M/s. Macos Iron Steel Pvt. Ltd., 5.1. The AO issued summons to the above said parties but none of them appeared. Hence, AO asked the assessee to produce the above entities. The assessee produced Shri Dharmendra Kumar Amritlal Darjee on behalf of M/s. KRC Trading Co. In the statement taken from him, he submitted that he has actually supplied the materials to the assessees herein. He also furnished details of his income tax returns, sales tax returns along with supporting documents to show payment of VAT. The assessee also furnished sales tax returns pertaining to another supplier named M/s. Macos Iron Steel Co. Ltd. In respect of remaining 10 parties, the assessee could not produce anything. 5.2. The AO noticed that the assessee had also purchased materials from M/s. J.B. Interlink. The proprietor of M/s. J.B. Interlink named Shri Kantilal Jayshankar Trivedi had admitted before sales tax authorities that he had provided only accommodation bills and did not supply materials. The AO further noticed that Shri Dharmendra Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) noticed that the AO has accepted the purchases. He has only held that the assessee has made the purchases by using unaccounted cash available with the assessee. Hence the AO has applied peak credit theory and assessed the peak amount as income of the assessee in a particular year. The Ld. CIT(A) noticed that the impugned bogus purchases made during the periods under consideration was 23% of the aggregate amount of purchases in the case of Milan H. Sanghavi (HUF) and 8% of the aggregate amount of purchases in the case of Milan H. Sanghavi. The addition made by the AO worked out to 42% of the value of impugned bogus purchases in the case of Milan H Sanghavi (HUF) and the addition made in the hands of Milan H Sanghavi worked out to 36% of the value of impugned bogus purchases. The assessee contended before the Ld. CIT(A) that the addition so worked out by the AO is on higher side. It was further pointed out that no unaccounted assets or cash were identified during the course of search action. 6.3. Under these set of facts, Ld. CIT(A) directed the AO to make addition to the tune of @12.5% of the value of the bogus purchases in all the years under consideration with the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold the materials and the said sales have been accepted by the AO. The assessee could not have sold the goods without actually purchasing the materials. He submitted that the suppliers have given self serving statements before the Sales tax authorities. Further the payments towards purchases have been made through account payee cheques. Under these set of facts, there was no basis for the AO to presume that the assessee has introduced unaccounted cash. He submitted that the Ld CIT(A) has appreciated all these aspects and accordingly estimated the profit from the alleged bogus purchases. Accordingly he submitted that the orders passed by Ld CIT(A) do not call for any interference. 9. We have heard rival contentions and perused the record. From the facts we notice that the search officials who searched M/s Satara Properties India Ltd proposed to include the concerns belonging to the assessees herein are also hawala operators, but M/s Satara Properties India Ltd did not accept the same. This fact would show that M/s Satara Properties India Ltd, whose search had triggered search action in the hands of the assessees herein, has confirmed the fact that the assessees herein have su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs made before the sales tax authorities. 12. Even though the AO has presumed that the assessees might have received cash back from such dealers, the same has not been substantiated with any material. On the basis of available facts, the AO has drawn such presumption and in the absence of any material to support the view so taken, it may not be proper to presume that unaccounted cash would have been introduced. Another important factor, which has been rejected by the AO is the submission of the assessee that they were getting credit period of 90 days for making payment to the suppliers. If the same is factored in, then the addition computed by the AO would go down drastically. 13. The Ld. DR placed his reliance on the decision rendered by Hon ble Supreme Court in the case of N.K. Proteins (supra). We notice that the decision in the above said case has been rendered on the basis of facts available in the case before Hon ble Supreme Court, while no such parity of facts was shown in the present cases. 14. For the reasons discussed in the preceding paragraph and in the facts and circumstances of the present cases, we are of the view that the Ld CIT(A) was justified in directin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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