TMI Blog2022 (11) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to establish the consumption of such goods in the execution of civil contract by adducing such stock movement records to the satisfaction of AO., then taxing such bogus purchases GP rate of goes against the principles of taxation embedded in chapter VI of the Act and against the ratio laid down in N K Proteins Ltd [ 2017 (1) TMI 1090 - SC ORDER] and PCIT Vs Pinaki D Pinani [ 2020 (1) TMI 700 - BOMBAY HIGH COURT] for the reason, we are of the considered view that, the Ld. AO was right in making 100% disallowance towards bogus / hawala purchases, and thus we are inclined to uphold the order of assessment and reverse the order the Ld. FAA. Appeal of the appellant revenue is allowed. - SHRI S. S. GODARA, JUDICIAL MEMBER AND SHR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it has been held that once the purchase are bogus, additions should be made on the entire purchases and not only the profit embedded in such purchases. 4. The appellant prays to be allowed to add, amend, modify, rectify, delete or raise any grounds of appeal during the course of appellate proceedings. 3. Before we proceed for adjudication, its apt to paraphrase the facts of the case as; 3.1 The respondent assessee is an individual and Govt Civil Contractor, has for AY 2009-10 filed his return of income [for short ITR ] on 26/09/2009 declaring total income of ₹1,38,98,500/-. 3.2 The sales tax department of Maharashtra conducted several raids on sales tax evader who are found to have engaged in hawala transaction extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance to recomputed gross profit ratio / margin [for short GP ] @16.96% on the reasoning that; In the instant case also, the AO has not disputed the appellant s sales and no discrepancy was pointed out by the AO between the purchases shown by the assessee and the sales declared. Thus following the decision of the Hon ble Bombay High Court, entire purchases are not to be added rather only the GP rate on the genuine purchases are to be added. 3.5 Aggrieved by the action of Ld. FAA in restricting the disallowance to GP Ratio as without justification and circumventing the decision of Hon ble Apex Court in N. K. Protein Vs DCIT , reported in 292 CTR 354 (SC), the revenue is in appeal on the grounds set in para 2 herein before. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y placing on record stock register, goods received note, gate entry register, octroi receipts, lorry receipts etc. 6. We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of ITAT Rules , perused the material placed on record, case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to parties present. 7. On perusal of records, we find that, upon the receipt of information from DGIT(INV), the Ld. AO after identifying the list of entry operators with whom the assessee had alleged hawala transactions and quantification of amount of bogus purchases involved, has put the respondent assessee to notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon ble Supreme Court in the case of NK Proteins Ltd vs DCIT (Supra) is squarely applicable to the facts of assessee case, where the Hon ble Supreme Court dismissed appeal of assessee and confirmed the findings of Hon ble Gujarat High Court in respect of bogus or sham purchases, wherein the Hon ble Lordships, after analysing necessary facts, by para 6 of the order have held that; 6. The Tribunal in the case of Vijay Proteins Ltd. (supra) has observed that it would be just and proper to direct the Assessing Officer to restrict the addition in respect of the undisclosed income relating to the purchases to 25% of the total purchases. The said decision was confirmed by this Court as well. On consideration of the matter, we find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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