TMI Blog2011 (11) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... prietor running business in the name and style of M/s Nitin Impex and engaged in the business of export of steel utensils. The assessee was entitled for deduction under section 80HHC. A survey operation under section 133A was carried out in the Office and Warehouse of the assessee on 19.12.2005. The Assessing Officer on the basis of the report of the investigation unit examined the purchases made by the assessee. The assessee had an export sale of ₹ 11,29,94,093/- and has purchased to the tune of ₹ 12,34,90,490/-. Out of that, the Assessing Officer identified 35 parties totaling to ₹ 7,48,42,474/- from whom the assessee seems to have purchased various items during the year but could not be verified by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this particular case there is scantly and very feeble evidence on record to hold that purchases are bogus in case of 34 parties. Only in one case purchase remained unverifiable. In that case also, it can also not be held that purchase was not made at all. AO has proceeded only on the basis that parties were not produced. AO has also not rejected the books of account. Simply adding the entire purchases defies all accounting principles. It appears to be finagles fly by AO. AO has not at all questioned the rate of purchase in comparison to market rate. Therefore, AO's finding is without any supportive material on record . 3. The learned Departmental Representative referring to various findings of the Assessing Officer submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted at GP at 4.5% on the entire turnover, whereas the CIT restricted the GP estimation to 3% of the tainted purchases in other years, the orders of which were upheld by the ITAT in ITA No.5927/Mum/ 2009 for Assessment Year 2006-07 and ITA No.3024 to 3028/Mum/2008 for the Assessment Year 2000-01 to 2003-04 and 2005-06. It was his submission that in all the years from 2000-01 to 2006-07 except this Assessment Year purchases were not disallowed. Therefore, the orders of the CIT (A) require to be confirmed. 5. We have considered the issue and examined the facts on record. It is noticed that the Assessing Officer disallowed the entire purchases from 35 parties for the reason that they are not verifiable holding them as non-genuine part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of remaining purchases. Therefore, uniform estimation and application of GP @ 4.5% is not sustainable. In view of this, we are of the considered opinion that the GP rate applied by the learned CIT (A) at 3% in respect of tainted purchases is fair and reasonable. Therefore, the findings of the learned CIT (A) in respect of all the assessment involved in the present appeals are upheld and the appeals of the revenue for all the Assessment Years are dismissed . 6. In view of this, disallowance of purchases by the AO is not correct and to that extent the CIT (A) order is to be upheld. Not only that the details of the verification of PAN of some cases have been placed on record which do indicate that the PAN is matching in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a large extent and purchases to the extent of ₹ 1,02,51,203/- should be excluded in case estimation was resorted to. We find that the confirmations filed by the assessee includes an enterprise M/s Nisha Enterprise in whose case the CIT vide page 10 of the order gave a finding that the purchases cannot be accepted as genuine. Even though, purchases from the above Nisha Enterprises was considered as non genuine, the CIT (A) however deleted the entire amount considered by the Assessing Officer. Therefore, considering these fact of purchases from M/s Nisha Enterprises to the tune of Rs..7,07,975/-, we are of the opinion that estimation of 3% GP on the total purchases so disallowed at Rs..7,48,42,474/- would justify on the given facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contention that if any addition is made on GP basis to the returned income, the peak cash deficit taxed at Rs..16,76,200/- should be given set off. The learned Departmental Representative however submitted that the dates of peak cash deficit and the GP on the bogus purchases vary and set off can not be allowed in the absence of co-relation between the GP income and income brought to tax as peak cash deficit. 12. We have considered the issue. As per rule 27 of the ITAT Rules the respondent though may not have appealed may support the order appealed against on any ground decided against him. Since the ground of double addition was dismissed by the CIT (A) on the reason that the addition of bogus purchases was deleted, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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