TMI Blog2020 (4) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. Commissioner of Income Tax (Appeals) 51, Mumbai, dated 09/10/2018 and it pertains to Assessment Year 2013-14. 2. The revenue has raised the following grounds of appeal:- 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition to the extent of 12.5% of the bogus purchases of ₹ 77,18,604/- booked by the assesee from purchase parties M/s Arch Marketing and M/s Overseas Impex. 2. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition to the extent of 12.5% of bogus purchase amount instead of 100% of bogus amount made by the assessing officer without considering the decision of Hon ble Apex Court in the case of N K Proteins Ltd Vs DCIT SLP CC No. 769 of 2017 on similar facts of case, when the assessee failed to prove the genuineness of transactions or produced the purchase parties. 3. The brief facts of the case are that the assessee is a partnership firm, which is engaged in the business of trading in medicines and drugs. A search action u/s 132 of the I.T.Act, 1961 was carried out at the premises of M/s. Shrigun Pharmachem Pvt.Ltd., on 26/11/2015. Consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit of the assessee- The Tribunal however, sustained the addition to the extent of 12.5%, Taking Into account the above facts, the Hon ble Gujarat High Court held that since the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded in such purchases could be added to the assessee's Income and as such no question of law arose in such estimation. The Tribunal while estimating the profit embedded In the transactions @ 12,5% held as under: Having heard the submissions of both the sides, we have been informed that the malpractice of bogus purchase is mainly to sav0 10% sales tax etc,, it has a/so been informed that in this industry about 2.5% is the profit margin. Therefore, respectfully fallowing the decisions of the co-ordinate bench pronounced on identical circumstances, we hereby direct that the disallowance is required to be sustained at 12.5% of the purchase from those parties. With these directions, we hereby decide the grounds of the rival parties which are partly allowed. 6.5 Moreover, the Hon'ble ITAT, Mumbai had an occasion of adjudicate this issue in the case of M/s Ratna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3% on total turnover, while for the year under consideration GP ratio earned was 5.45%. In our considered view and based on facts and circumstances of the case as discussed by us in details above, end of justice will be met in this case if GP ratio of 12.5% on alleged bogus purchases is added to income of the assessee against which credit for the declared GP ratio on the alleged bogus purchases will be granted by the AO after verification by the AO because of failure of the assessee to come forward to discharge primary onus cast upon him as detailed above for which assessee is to be blamed and in the midst of afore-stated un-rebutted allegation against the assessee and non-discharge of primary onus, the declared lower GP ratio of 5.45% in the instant previous year under appeal cannot be accepted. Thus, in nut-shell we are inclined to adopt GP ratio of 12.5% on alleged bogus purchases in the instant case which in our considered view is fair, reasonable and rational! keeping in view the factual matrix of the case, while the assessee shall be granted credit of GP ratio declared on this bogus purchases in the return of income fifed with the Revenue. The assessee gets part relief. We o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file further evidence in the backdrop of clear finding by the Sales Tax Department, Maharashtra that those parties are involved in providing accommodation entries without actual delivery of goods. The Ld. AO had also taken support from the investigation conducted during the course of assessment proceedings, as per which notice issued u/s 133(6) to the parties were returned un-served by the postal authorities. Therefore, he came to the conclusion that purchases from the said parties are bogus in nature. It is the contentions of the assessee before the lower authorities that purchases from the above party are supported by necessary evidences. It has furnished all possible evidences, including books of accounts; stock details and bank statement to prove that payment against said purchases have been made through proper banking channels. 6 Having considered arguments of the Ld. DR and also, material available on record, we find that both the sides have failed to prove the case in their favour with necessary evidences. Although, assessee has filed certain basic evidences, but failed to file further evidences to conclusively prove purchases to the satisfactions of the Ld.AO. At the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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