TMI Blog2022 (9) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... errous industry during the relevant assessment year. We deem it fit to modify the impugned order only to the extent that the disallowance on account of bogus purchases should be restricted to the total of rate of VAT applicable during the year under consideration in the State of Maharashtra on the goods traded by the assessee and gross profit earned by the assessee during the year under consideration. We, accordingly, direct the AO to recomputed the disallowance. The sole ground raised in assessee's appeal is partly allowed. - ITA No.559/Mum./2022 And ITA No.560/Mum./2022 - - - Dated:- 19-9-2022 - Shri Om Prakash Kant, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Bharat Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of ferrous and non-ferrous metal. For assessment year 2009 10, assessee e-filed his return of income on 08/07/2009 declaring total income of Rs. 1,37,407. Information was received from DGIT (Investigation) wing, Mumbai about having initially received information from the Sales Tax Department of Maharashtra regarding some dealers indulged in practice of providing accommodation entries in the form of issuing bogus sales/purchase bills without supplying any goods but providing accommodation entries. As per the list of beneficiaries forwarded by DGIT (Investigation), Mumbai the assessee was also one of the beneficiaries of such bogus bills. On the basis of the aforesaid information from the investigation wing, reassessment proceedings were in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chases made are genuine. Further, the AO held that only part of purchases can be disallowed where corresponding sales are treated as geniune or alternatively the profit embedded in such sales can only be brought to tax. Accordingly, the AO, following the decision of Hon ble Gujarat High Court in CIT vs Simit P. Sheth, (2013) 356 ITR 451 (Guj), made an addition of Rs. 8,60,860 by considering 12.5% of the purchases as possible profit out of such purchases made through non-genuine parties. 6. In appeal, learned CIT(A) vide impugned order upheld the assessment order on this issue. Being aggrieved, the assessee is in appeal before us. 7. During the course of hearing, learned Authorised Representative ( learned AR ) submitted that only moti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rify the genuineness of the purchases made by the assessee, notice under section 133 (6) of the Act were issued. However, the same were returned as unserved. The AO also granted opportunity to the assessee to establish the genuineness of the parties and purchases made from them with adequate supporting evidences and also requested to produce the parties. However, the assessee neither produces these parties nor furnishes new addresses of these parties. The assessee merely produced invoices, delivery challans and Ledger accounts of these parties in its books. Since the assessee is a trader and the corresponding sales were accepted as genuine, therefore, the AO restricted the addition on account of non-genuine purchases to 12.5% following the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: 7. Having heard the submissions of both sides, we have been informed that the malpractice of bogus purchase is mainly to save 10% sales tax etc. It has also been informed that in this industry about 2.5% as the profit margin. Therefore, respectfully following the decisions of the co-ordinate bench pronounced on identical circumstances, we have a direct that the disallowance is required to be sustained at 12.5% of the purchases from those parties. With these directions, we hereby decide. The grounds of the rival parties which are partly allowed. 12. Thus, from the above it is evident that the basis on which the coordinate bench of the Tribunal restricted the addition to 12.5% is by considering the percentage of sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 560/Mum./2022 Assessee s Appeal A.Y. 2010 11 14. In this appeal, assessee has raised following grounds: 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming addition of Rs.16,06,021, which was 12.50% of alleged bogus purchase. 15. The issue arising in sole ground raised in assessee s appeal is similar to the ground raised in assessee s appeal for assessment year 2009 10, except with variance in amount of addition. Therefore, our findings / conclusions in aforesaid appeal for assessment year 2009-10 shall apply mutatis mutandis to this ground also. As a result, sole ground raised in assessee s appeal is partly allowed. 16. In the result, appeal by the assessee fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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