TMI Blog2018 (2) TMI 1971X X X X Extracts X X X X X X X X Extracts X X X X ..... ce made by the lower authorities @ 12.5% is in respect of the monetary benefit which the assessee would have generated from making of the purchases from the open/grey market. We thus in terms of our aforesaid observations are of the considered view that the addition/disallowance @ 12.5% of the value of the bogus purchases so made by the A.O had rightly been upheld by the CIT(A). We thus in terms of our aforesaid observations uphold the order of the CIT(A). - Decided against assessee. - ITA No. 6555/Mum/2017 - - - Dated:- 7-2-2018 - SHRI G.S.PANNU, AM AND SHRI RAVISH SOOD, JM For the Appellant : Shri S. Sriram, A.R For the Respondent : Ms. N. Hemlata, Sr. D.R ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transaction Amount (Rs.) 1. M/s Vidhi Metal Industries 14,51,995/- 2. M/s Bhavaimaa Impex 7,62,840/- Total 22,14,835/- The A.O on the basis of the aforesaid information reopened the case of the assessee under Sec. 147 of the Act. 3. That during the course of the assessment proceedings the A.O called upon the assessee to substantiate the genuineness and veracity of the purchase transactions on the basis of documentary evidence, as well as directed it to produce the parties for necessary examination before him. The assessee in compliance to the direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The A.O being of the view that the assessee had benefited by purchasing the goods from certain unidentified parties at a rate lower than that at which the same was booked in its books of accounts, relied on the judgment of the Hon ble High Court of Gujarat in the case of CIT Vs. Simit P. Sheth (2013) 356 ITR 451 (Guj) and quantified such benefit/profit @ 12.5% of the bogus purchases of ₹ 22,14,835/- and made a consequential addition of ₹ 2,76,854/- in the hands of the assessee. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee submitted before the CIT(A) that as it had produced all the details before the A.O in support of the genuineness of the purchase transactions under consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racity of the purchase transactions under consideration. The CIT(A) being of the view that as the assessee had failed to prove that it had received the goods from the aforementioned parties, therefore, observed that the A.O had rightly characterised the purchase transactions under consideration as bogus. The CIT(A) was also not persuaded to be in agreement with the assessee that the authenticity of the purchase transactions under consideration could be gathered from the fact that the payment of the purchase consideration to the aforementioned parties was made by cheques. The CIT(A) observed that the fact that there was a substantial time gap between the purchase transactions and the payments made to the aforementioned parties and a substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1057 1058 dated 07.03.2017) upheld the disallowance made by the A.O @ 12.5% of the bogus purchases under consideration. 5. The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Authorized Representative (for short A.R ) at the very outset submitted that the lower authorities had erred in making a disallowance/addition @ 12.5% of the bogus purchases, without taking cognizance of the gross profit rate that was already accounted for by the assessee in its books of accounts. Per contra, the ld. Departmental Representative (for short D.R ) relied on the orders of the lower authorities. 6. We have heard the authorized representatives for both the parties, perused the orders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus purchases. We have deliberated at length on the orders of the lower authorities and are of the considered view that no infirmity emerges from the order of the CIT(A) who had rightly sustained the addition/disallowance made by the A.O @ 12.5% of the value of the bogus purchases. Before parting, we may herein observe that the ld. A.R had averred before us that the lower authorities had erred in not reducing/scaling down the estimated monetary benefit of 12.5% by the gross profit rate as had already been accounted for by the assessee in its books of accounts in respect of the sale of the goods under consideration. We are unable to persuade ourselves to accept the aforesaid contention of the assessee. We are of the considered view that as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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