TMI Blog2019 (12) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bhoopathi ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals) 1, Mumbai [hereinafter in short Ld.CIT(A) ] dated 30.08.2018 for the A.Y. 2010-11 in restricting the disallowance to 5% of the purchases of ₹.5,06,695/- as against the entire purchases disallowed as non-genuine/bogus by the Assessing Officer. 2. Briefly stated the facts are that, the assessee is engaged in the business of Manufacturing of Dyes Chemicals , filed return of income on 26.09.2010 for the A.Y.2010-11 declaring income of ₹.1,76,910/- and the return was processed u/s. 143(1) of the Act. Subsequently, Assessing Officer receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer treated entire purchases of ₹.5,06,695/- as non-genuine and added to the income of the assessee. On appeal the Ld.CIT(A) considering the evidences and various submissions of the assessee restricted the disallowance to the extent 5% of the non-genuine purchases. 3. Inspite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought by the assessee. Therefore, we proceed to dispose off this appeal on hearing the Ld. DR on merits. 4. Ld. DR vehemently supported the order of the Assessing Officer. 5. Heard Ld. DR on merits and perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A), we find that the Ld.CIT(A) considered this aspect of the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hawala parties have run away from their original addresses and the appellant is not in a position to furnish the current verifiable addresses, therefore, the department is also not in a position to enquire the genuineness of these purchases, mainly due to failure on the part of the appellant. 6.8. As regards other aspects such as payment through banking channels, justification for purchases made from hawala parties as genuine, sales made against such purchases, etc., I would like to place the reliance on finding of the Hon'ble Supreme Court, in the case of Lachminarayan Madan Lal v. CIT (1972) 86 ITR 439 (Supreme Court), wherein it is held that even if there is an agreement, between the assessee and its agents for payments of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.10. Considering the above facts and in view of the decision of the Hon. Delhi High Court in the case of CIT Vs. Jansampark Advertising and Marketing (P) Ltd., it is also an obligation on the part of the First appellate authority to ensure that the effective enquiry is carried out, to arrive at logical conclusion. Therefore, to understand the impact of booking of hawala purchases on the profit of the year, the Ld. AR wasw required to furnish the comparative details of GP/NP and GP/NP rates for hawala years, preceding two years and subsequent two years. In compliance, the appellant has submitted the details, as under: Asst Yr . 2008 - 09 2009 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 % 2 . 20 % 2 . 80 % NP After add of BP -- -- 6,89,335 -- -- NP Rate -- -- 9 . 27 % -- -- 6.11. From the above details it is seen that in the year under appeal i.e. A.Y. 2010-11 the appellant had declared NP @ 2.26%, which is much lesser then the NP rate of 5 prescribed in the provisions of section 44AF of the Act for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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