TMI Blog2016 (8) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... items at a small mark up to it s purchases without any further processing. AO has not questioned sales made by the assessee. Most of the sales were made to a government entity. AO has not doubted sales undertaken by the assessee nor rejected books of accounts. However, no comparative chart was placed on record by assessee to substantiate the contention that assessee had earned same margin of profit out of sales of goods purchased from hawala dealers vis-a-vis other regular dealers. Keeping in view the GP rate and net profit rate shown by the assessee in earlier years vis-a-vis profit rate generally shown by other assessee engaged in similar trade, and also keeping in view the advantage obtained by assessee through purchases from hawala d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I), ONGC, Mazgaon Docks Ltd and Coast Guards Region (West), which constitutes almost 98% of total sales revenue. The assessee had filed the return of income on 07/11/2007 declaring total income at ₹ 29,58,970/-. Assessment u/s 143(3) was completed on 22/12/2008 (as mentioned in the computation of total income in the assessment order) assessing total income of ₹ 30,44,247/-. The information was received from the office of the DDIT (Inv) Unlt-Il (1) that the assessee had shown bogus/suspicious purchases from various vendors who are listed in the web site of sales tax department and which are presumed as hawala dealers by the sales tax Department. accordingly an open enquiry was conducted by the investigation wing and during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es before the AO which include partywise sales summary, product wise sales summary, partywise TIN details and ledger/accounts confirmation/bank statements. 7. Our attention was also invited to the statement of Mr. Gilitwala (Partner) under oath that to his knowledge all purchases were genuine and to the fact that all payments or purchases were made by account payee cheque. It was also alleged by ld. AR that opportunity to cross examine alleged Hawala dealers were requested but neither the statement nor an opportunity was given. As per ld. AR the assessee has net margin before partner s remuneration taxes @5.8% only and almost 98% of sales revenue comes from competitive tender sales to PSU s where the margins are low. 8. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by other assessee engaged in similar trade, and also keeping in view the advantage obtained by assessee through purchases from hawala dealer and the totality of facts and circumstances of the case, we modify the orders passed by lower authorities and restrict the addition to the extent of 3% of the alleged bogus purchases in place of 10% upheld by AO and 6% upheld by the CIT(A). 12. As the facts and circumstances in all the other years are exactly same, following the reasoning given hereinabove, we direct the AO to restrict the addition to the extent of 3% of the disputed purchases. 13. In the result, all appeals of the assessee are allowed in part. Order pronounced in the open court on this 24/08/2016. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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