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TMI Blog2020 (4) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... e reassessment proceedings under section 147 of the Act without appreciating the facts and circumstances of the case. 2. The Ld. CIT(A) erred in upholding the disallowance of Rs,2,80,195/- being 25% of the alleged bogus purchases under section 69C of the Act without appreciating the facts and circumstances of the case. 3. The Ld. CIT(A) failed to appreciate that the above addition is merely based of the information received from the sales tax department and statement of third partly without providing the Appellant an opportunity to cross examine the same. Thus, the disallowance of Rs. 2,80,195/- under section 69C of the Act is against the principle of natural justice and the same may be deleted. 3. The brief facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also challenged addition towards bogus purchases with certain additional evidence. The additional evidences filed by the assessee has been forwarded to AO for his comments and the AO vide his remand report dated 13.01.2017, commented as to why additional evidence filed by the assessee cannot be accepted. 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 various decisions, scaled down addition towards bogus purchases to 25% profit on such alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re made, but from elsewhere. 6.5. Even if materials have been purchased,, they are not purchased form these parties and may be in cash from un-disclosed parties. By purchasing from the grey market, the appellant would have benefitted by the savings of taxes. Direct statement of shri Gupta applies to purchases from only two entities via. Muni Trade P, Ltd and Yashobhumi Traders P. Ltd. from whom purchases claimed are Rs. 2.88 crores. The balance purchases of Rs. 1.94 crores are disallowed based on pattern noted on bills and receipt 1 am guided by the ratio of decision of the Hon'ble Gujarat High Court in the case of CIT Vs Simit P. Sheth pronounced on 16.1.2013 in tax appeal No.5531 of 2012 wherein the Hon'ble Court have held that when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, but failed 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 party were returned un-served by the postal authorities. Therefore, he came to the conclusion that purchase from the said party is bogus in nature. It is the contentions of the assessee before the lower authorities that purchase from the above party are supported by necessary evidences. It has furnished all possible evidences, including books of accounts; stock details and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai, in number of cases had considered an identical issue and depending upon facts of each case, directed the Ld.AO to estimate profit of 10 to 15% on total alleged bogus purchases. In this case, considering the nature of business of the assessee the Ld. AO has estimated 100% profit, whereas the ld. CIT(A) has restricted addition to 25% profit on alleged bogus purchases. Although, both authorities have considered different rate of profit for addition towards alleged bogus purchase, but no one could support said addition with necessary evidences or any comparable cases. Therefore, considering facts and circumstances of this case and consistent with view taken by the Co-ordinate, we direct the ld. AO to estimate 12.50% profit on alleged bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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