2023 (7) TMI 1040

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..... ddition on account of bogus purchases. The ground No. 6 of appeal is with respect to levy of interest u/s. 234A, 234B and 234C of the Income Tax Act, 1961 [ in short 'the Act]. In ground No.7 of appeal, the assessee has assailed initiation of penalty proceedings u/s. 271(1)(c) of the Act. The ground No.8 is general in nature. 3. Shri D.C.Saboo appearing on behalf of the assessee submits that the assessee is a partnership firm engaged in trading of iron and steel. The assessment for Assessment Year 2010-11 was reopened on the ground that the assessee has indulged in obtaining bogus purchase bills amounting to Rs. 2,01,91,960/- from various (eleven) parties, declared as hawala operators. The ld. Authorized Representative of the assessee subm .....

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..... ment year is far more than the G.P in the preceding assessment years. The ld. Authorized Representative of the assessee submitted that estimation of G.P by Assessing Officer and CIT(A) at 12.5% on alleged bogus purchases is very much on the higher side. The ld. Authorized Representative of the assessee further submitted that while computing the amount of alleged bogus purchases, the Assessing Officer has erroneously included cost of one machinery amounting to Rs. 1,94,832/-. A perusal of the balance sheet and statement of fixed assets would show that the assessee has capitalized the cost of said machinery and has claimed depreciation on the same. The depreciation claim on said machinery has been allowed to the assessee. Hence, the cost of m .....

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..... ppear before the CIT(A) despite repeated notices. Thus, the First Appellate Authority was constrained to decide appeal on merits in ex-parte proceedings. The CIT(A) has upheld the assessment order. We are of the considered view that the assessee has failed to show genuineness of the purchases and the parties from whom such purchases were made. We concur with the findings of the Authorities below that the assessee has indulged in obtaining bogus purchase bills from declared hawala dealers. As regards estimation of G.P on bogus purchases, we are of considered view that the estimation of G.P at 12.5% is on the higher side. Keeping in view, the assesee's nature of business and the G.P already declared by the assessee in the impugned assessment .....

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