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TMI Blog2021 (12) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening u/s.148 was not justified in law and accordingly, the reasst. order ought to have been held as null and void. 2. The learned CIT(A) erred in confirming the disallowance of 25% of the purchases of Rs. 1,51,69,487/- made by the assessee firm form M/s. Oriental Enterprises on the ground that the assessee had failed to establish with proper evidence the genuineness of the said purchases. 3. The learned CIT(A) failed to appreciate that the purchases made by the assessee firm from M/s. Oriental Enterprises were genuine and accordingly, no disallowance was warranted at all and the addition confirmed of Rs. 37,92,372/- may kindly be deleted. 4. Without prejudice to the above grounds, the assessee submits that the disallowance con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer initiated reassessment proceedings and issued notice u/s.148 of the Act on receipt of information from Sales Tax Department, Maharashtra which had conducted inquiries in cases of several dealers located on across Maharashtra and had unearthed of a racket involving more than 1935 Hawala Dealers and more than 33,700 beneficiaries including the present assessee. The hawala dealers were found to involve in making bogus invoices to allow a trader to claim tax credit posing himself as 'seller' existed only on paper and has issued fake bills to the concern and got commission in return. The beneficiary, in turn, got the input tax credit on the material which had never been purchased in reality. The assessee under consideration wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 2, 3 & 4 :- 7. The assessee has also challenged the First Appellate Order wherein the Ld. CIT(Appeals) has confirmed the disallowance of 25% of total impugned bogus purchases made by the assessee from M/s. Oriental Enterprises. 8. On perusal of the Form 35 along with Form 36 and other materials available on record, we find that the main contention of the assessee on this issue is appreciating that the Ld. CIT(Appeals) was not correct in confirming the addition as he failed to appreciate that the purchases made by the assessee from M/s. Oriental Enterprises were genuine and accordingly, no disallowance was warranted at all and the addition confirmed to the tune of 25% of the total impugned purchased of Rs. 37,92,372/- should be dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that the entire amount of hawala purchase bills requires addition. The Hon'ble jurisdictional High Court in Pr.CIT Vs. Paramshakti Distributors Pvt. Ltd., vide its judgment dated 15.07.2019 in ITA No.413/2017, has sustained the addition @ 10% of the amount of purchases, being, the profit element involved therein. The relevant extracts of the Hon'ble High Court's decision reads as follows: "2. The first question pertains to restricting the addition of Rs. 23.16 Lakhs to Rs. 2,21,600/- by the Tribunal. The Assessing Officer had made the said addition on the ground that the assessee's purchases were found to be bogus. The entire purchase amount was therefore, added to the assessee's income. The Tribunal, however, restricted to the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The relevant findings of the Tribunal reads as follows: "11. We have heard both sides and gone through the relevant material available on record. It is observed that the assessee allegedly purchased raw materials through the Hawala purchase bills and thereafter consumed the same in the power project sites. In such a situation, it cannot be said that the entire amount of hawala purchase bills requires addition. The Hon'ble jurisdictional High Court in Pr.CIT Vs. Paramshakti Distributors Pvt. Ltd., vide its judgment dated 15.07.2019 in ITA No.413/2017, has sustained the addition @ 10% of the amount of purchases, being, the profit element involved therein. The relevant extracts of the Hon'ble High Court's decision reads as follows: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order has restricted the addition to 25%, which is higher than that approved in the above judicial precedent and therefore, in our considered opinion, there can be no grievance at the end of the Revenue." 12. Therefore, in the facts and situation wherein bogus purchases were made and they were consumed, the Hon'ble Jurisdictional High Court has held 10% addition of such bogus purchases to be reasonable, whereas, in this case, the Ld. CIT(Appeals) has made disallowance at 25% of such bogus purchases which is more than that held by the Hon'ble Jurisdictional High Court (supra.). In such scenario, we are of the considered view that it would be reasonable to sustain addition @ 10% of the amount of bogus purchases, being profit element in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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