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TMI Blog2021 (3) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... ding chemicals, filed return of income on 29.09.2009 declaring income of Rs..39,15,350/- for the A.Y. 2009-10 and the return was processed u/s. 143(1) of the Act. Subsequently, Assessing Officer received information from the Sales Tax Department, Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. The assessment was reopened U/s. 147 of the Act based on the information received from Sales Tax Department, Mumbai, that the assessee has availed accommodation entries from various dealers who are said to be providing accommodation entries without there being transportation of any goods. In the reassessment proceedings, the assessee was required to prove the genuinene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumable and the purchase was an item debited to Plant and Machinery Account. Thus, the amount is not claimed a deduction from taxable income and requested to uphold the order of the Ld.CIT(A). 5. Ld. DR vehemently supported the orders of the Assessing Officer. On a perusal of the order of the Ld.CIT(A), I find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and following the decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Sheth [356 ITR 451] restricted the addition to 12.5% of the alleged bogus purchases. While holding so, the Ld.CIT(A) observed as under: - "5.8 I have considered the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with the intension to suppress the true profit and to reduce the tax liability. The Ld. Assessing Officer disallowed the bogus purchases of Rs. 59,467/-. It is noted that it is a fact that the assessee could not prove the genuineness of the purchases and even the concerned parties were not found existence at the given addresses. Even on asking the by the Ld. Assessing Officer, the assessee could not produce such parties or their confirmations on record. It is noted that the addition has been made by the Ld. Assessing Officer on the basis of information from the Sales Tax Department about bogus billers. The Ld. Assessing Officer asked the assessee to file evidence for delivery of goods such as transporter's bills, delivery challan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liers would be willing to sell at a much less rate as compared to the rate that they would have charged otherwise, certainly goods must have been purchased from the grey market therefore the profit made by the assessee would be equal to the difference in price of bogus purchases and the rate at which goods are obtained from the grey markets. In this context, the Hon'ble High Court of Gujarat while deciding a similar issue in the case of C1T Vs Simit P Sheth 356 ITR 0451 held the following: "Once the sale is accepted by the A. 0., the very basis of purchases could not be questioned. Not the entire purchase price could be disallowed but only the profit element embedded in such purchases could be added to the income of the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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