TMI Blog2022 (3) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2% of such bogus purchases as addition. Therefore, we also reject the arguments of the assessee of restricting the profit only to 2 percentage. - ITA No. 6591/Mum/2019 And ITA No. 6590/Mum/2019 And ITA No. 6580/Mum/2019 And ITA No. 6579/Mum/2019 - - - Dated:- 25-3-2022 - Shri Prashant Maharishi, AM And Shri Pavan Kumar Gadale, JM For the Appellant : Shri RA Dhyani, DR For the Respondent : Shri Vimal Punmiya, AR ORDER PER PRASHANT MAHARISHI, AM: 01. These are the four cross appeals for two different assessment years i.e. Assessment Year 2009-10 and 2010-11 filed by the parties against the order passed by the learned Commissioner of income-tax (Appeal)-40, Mumbai [ The Ld CIT (A) ] dated 23.07.2019 for both the years. 02. The appeal of the learned Assessing Officer for Assessment Year 2009-10 in ITA No. 6591/Mum/2019 has following grounds of appeal:- A. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A)) has erred in restricting the disallowance of 12.5% of the total of bogus purchase transaction instead of 100% of the total amount of bogus purchase made by the AO for the A. Y. 2009-10? B. Whether on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance @ 12.50% over and above the profit disclosed by the appellant is unfair; 04. Brief facts of the case show that assessee is a partnership firm engaged in the business of washing and processors of garments and manufacturing of the garments. It filed its return of income at ₹ 29,14,879/- which was assessed under section 143(3) of the Income tax Act [ the Act] on 17.11.2011 at ₹ 31,08,370/-. Thereafter information was received that assessee is one of the beneficiary of accommodation bills in the form of bogus purchases and therefore the notice under section 148 of the Act was issued to the assessee on 26.02.2013. 05. During the course of reassessment proceedings the Assessing Officer found that because of investigation carried out by the sales tax department, it was found that assessee has purchased of ₹ 40,06,166/- from M/s Saileela Trading Pvt. Ltd. and ₹ 2295/- from M/s Nisha Enterprises. The assessee could not provide the address of Nisha Enterprises. With respect to Saileela Trading Pvt. Ltd., notices were issued under section 133(6) of the Act but no response was received. Therefore, assessee was asked to produce the above party. Same we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cion is not enough to treat the purchases as bogus. He relied on several judicial precedents for this proposition. He further referred to 13 different judicial precedence and submitted that on identical facts, the profits have been estimated from 0.2 % to 8.5% and therefore, the addition more than 2% cannot be justified. 010. We have carefully considered the rival contentions and perused the orders of the lower authorities. The fact shows that assessee is a partnership firm engaged in the business of government washing processing and stitching. The information was received from the DGIT (investigation) that the assessee has taken certain accommodation entries to inflate its purchases. Therefore the enquiry was conducted by issue of notice u/s 133 (6) of the act wherein it was found that many of such parties are not available at the address given and notices have returned. Therefore, these parties were not traceable. Assessee was asked to produce them along with the details of purchase of goods including transportation, delivery challans and stock registers etc. The assessee did not maintain stock register and quantitative details have also not been produced therefore the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplies in the books of the appellant, bank statements avoidance in the payment made by the appellant by banking channel wherein the name of such suppliers are reflected in the bank statements. The details submitted before the AO have not been considered even though the appellant filed document evidences and the additions made purely based on assumptions and surmise. The AR of the appellant depended that there is no evidence or material on record to justify that appellant had made any bogus purchases. The purchases had been made through the brokers who supplied the goods at premises of the appellant who received the goods and sold by the appellant at the profit margin of more than 15% on sales. The AR of the appellant also mentioned that the AO has not rejected the appellant s books of accounts u/s 145 (3) and having accepted the book results, the AO is not justified in making the usual disallowance of purchases of ₹ 8,675,913/ . The AO simply relied on since tax authorities information regarding the list of 1555 parties as hawala who had not paid their VAT tax liability to the government due to which the input setup ( ITC) u/s 48 (5) of the ambit act 2000 to would be di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this ground of appeal. 011. During the course of assessment proceedings, it is the claim of the assessee that it has produced various documentary evidences such as purchase bills, corresponding sales bills, and confirmation of accounts, permanent account number of the suppliers, bank statements evidencing the payments made to the four parties to justify the genuineness of the recorded purchases. From this, it is apparent that assessee has shown that bogus purchases have also gone into the sales of the goods as it has produced corresponding sales bills. This fact has not been challenged by the revenue. As the bogus purchases shown by the assessee have also been reflected in the corresponding sales, we do not find any infirmity in the order of the learned CIT A in upholding the addition of bogus purchases only to the extent of 12.5% of such purchases. 012. The judicial precedent relied upon by the learned departmental representative are on distinguishable facts. In case of Arun Malhotra [[2014] 47 taxmann.com 385 (Delhi) the matter was remanded to the ITAT for deciding the issue afresh and with reasons and after looking at the evidences. In case of CIT V La Medica 2001] 117 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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