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TMI Blog2020 (4) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... % of Rs. 3,05,438/-) on account of bogus purchases, without appreciating that the fact that the Sales Tax Department has proved beyond doubt that the parties declared as hawala traders were involved in providing accommodation entry of purchases and the assesse was one of the beneficiary of accepting accommodation for the purchase " ii. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the ratio of the decision of Gujarat High Court in the case of N.K Proteins Ltd. Wherein it was confirmed that in the event of bogus purchases , the addition on the whole of such purchases was required to be made and this particular ratio was confirmed by the Hon'ble Supreme Court in SLP No. CC No. 76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assesse has reitrated his arguments made before the ld. AO. The sum and substance of arguments of the assessee before the Ld.CIT(A) are that purchase from the above party is genuine, which is supported by necessary evidences. Therefore, no additions could be made on the basis of information received from third party. The Ld.CIT(A), after considering relevant submission of the assessee and also, by following the decision of Hon'ble Gujarat High Court, in the case of CIT vs. Simith P. Sheth (356 ITR 451) scaled down addition made by the AO towards alleged bogus purchases to 12.50% gross profit on total purchases from those parties. The relevant findings of the Ld.CIT(A) are as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for purchases stands explained through the bank account. Therefore invoking of section 69C in the present case is not proper. 4.2 In such circumstances many Benches of ITAT and Hon'ble High Courts have held that when purchases are supported by sufficient documentary evidences, then merely because of non-appearance before the AO, one cannot conclude that the purchases were not made by the assessee. Reliance is placed on Nikunj Eximp Enterprises (P.)Ltd. v. CIT 216 Taxman 171 (Bom.), CJT v. Nangalia Fabrics (P.)Ltd. 220 Taxmann 17 (Guj.), CIT v. M.K. Bros. 163 ITR 249 (Guj.)f Asstt.CIT v. Akruti Dyeing & Printing Mills (R)Ltd, Dy. CIT v. Adinath Industries [2001] 252 ITR 476 (Guj,), CIT v- Precious Jewels Corpn.17 taxmann.com 264 (Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial were not at all made but entered in the stock to inflate me raw material. Therefore the decision of the Supreme Court in the case of M K Proteins Ltd 250 taxman 0022(SC) would not apply to the case. Therefore the saving on account of VAT and other incidental charges made by the appellant on the said bogus purchases can be brought to tax as additional profit Keeping in view the totality of facts and circumstances of the case, the disallowance made by the AO is restricted to 12,5% of such purchases. Therefore the AO is directed to estimate the 12.5% on the actual purchases Rs. 3,05,438 which works out !o Rs. 38,180. The AO is directed to modify the addition accordingly and the appellant gets part relief. This ground is partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed certain basic evidences, but failed to file further evidences to conclusively prove purchases to the satisfactions of the Ld.AO. At the same time, the Ld. AO had also failed to take the investigation to a logical conclusion by carrying out necessary enquires, but he solely relied upon information received from investigation wing, which was further supported by information received from Maharashtra Sales Tax Department. Under these circumstances, it is difficult to accept arguments of both the sides. Further, in a case where purchases are considered to be purchased from suspicious/hawala dealers, various High Courts and Tribunals had considered an identical issue in light of investigation carried out by the Sales Tax Department an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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