TMI Blog2021 (3) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Shri Parekh. However, the AO has not done even preliminary inquiry to verify the contentions of Shri Parekh. AO has also noted in the assessment order at page 6 that the assessee was able to correlate the purchases of materials with the allocation of raw materials and sale of finished goods. CIT(A) has rightly deleted the estimated profit @ 12.5% on purchases of ₹ 18,93,737/- from Hiten Enterprises. He has rightly restricted the disallowance to 12.5% of purchases of ₹ 26,719/- from Raj Traders. - ITA No. 5177/MUM/2019 - - - Dated:- 19-3-2021 - SHRI VIKAS AWASTHY ( JUDICIAL MEMBER ) AND SHRI N. K. PRADHAN ( ACCOUNTANT MEMBER ) Revenue by : Mr. Sanjay J. Sethi, DR Assessee by : Mr. Dinesh Diwale, AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by attracting provisions of section 40A(3). 5. Though the tax effect is below the monetary limit prescribed in the CBDT Instruction No 3/2018 dated 11.07.2018 as amendment on 20.06.2018 as the case falls in the exception provided in Para 10(e) of the said instruction in as much as the addition is based on information received from external sources in the nature of law enforcement agencies, namely Sales Tax Authorities. 3. Briefly stated, the facts of the case are that the assessee-firm filed its return of income for the assessment year (AY) 2009-10 on 25.09.2009 declaring total income of ₹ 27,55,591/-. On receipt of information from the Director General of Income Tax (Inv), Mumbai that the assessee had obtained bogus purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some wrong transactions. However, I have done genuine business with M/s. Smita Electrical Industries and the entries were through Jain Sahakar bank ltd, Mandvi Branch, Mumbai-400 003. Having considered the above statement along with the facts and circumstances of the case, the AO estimated the profit @ 12.5% of the disputed purchases of ₹ 19,20,456/- and accordingly, made an addition of ₹ 2,40,057/-. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld .CIT(A). We find that vide order dated 10.05.2019, the Ld. CIT(A) held that : 5.2 I find that the AO has not been able to bring any evidence to the contrary to show that, the above said details and evidence furnished were not correct except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard the rival submissions and perused the relevant materials on record. In the instant case, the AO has recorded the statement of Shri Hiten Parekh, proprietor of M/s Hiten Enterprises, from whom the assessee claimed to have made the purchases. In that statement, Shri Parekh has stated before the AO categorically that he had done genuine business with M/s Smita Electrical Industries (the assessee) and the entries were through Jain Sahakar Bank Ltd., Mandvi Branch, Mumbai-400003. The AO could have made further inquiries/investigations to dislodge the above statement of Shri Parekh. However, the AO has not done even preliminary inquiry to verify the contentions of Shri Parekh. The AO has also noted in the assessment order at page 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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