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TMI Blog2015 (12) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... .5% of the gross purchases would meet the ends of justice and I direct the AO accordingly. In other words, addition reference to 22.5% of purchases made in grey market is hereby directed to be added to the total income. As regards interest charged under section 234A, 234B and 234C of the Act, as rightly observed by the learned CIT(A), the AO has no discretion in this regard. However, the assessee would get substantial relief, if any, in the light of the fact that the disallowance is scaled down further. - Decided partly in favour of assessee. - ITA NoS. 4559 & 4561/Mum/2015 - - - Dated:- 12-10-2015 - Shri D. Manmohan, Vice President For The Appellant : Shri Anuj Kisnadwala For The Respondent : Shri Jeevan Lal Lavidya OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as for A.Y. 2011-12 the addition made under section 69C works out to ₹ 4,83,563/-. 4. Aggrieved, assessee contended before the CIT(A) that the addition made on account of alleged information of non genuine purchases is not in accordance with law. It was contended that reconciliation of transaction of purchases and receipt of material, etc., after a gap of more than two years, may be difficult for the assessee - to produce the parties - and so long as the sales are accounted for, assessee cannot be expected to discharge her onus of proving the source of purchase. Therefore the AO should not have made addition under section 69C of the Act. 5. The learned CIT(A) considered the issue exhaustively in para 5 of his order. He observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) it is noticed that the learned A.R. for the assessee prayed that at the most 25% of bogus purchases need be disallowed as the assessee is not in a position to prove the purchases. 6. The learned CIT(A) has taken into consideration several case law in support of his conclusion that in the case of unproved purchases even 100% addition can be made though in the given circumstances 25% disallowance would be reasonable. In this regard he observed as under: - 5.6 I have carefully considered the submissions of the Ld. AR and noticed that the claim of the appellant, i.e. sales against hawala purchases have also been credited in the P L a/c., appears to be in order, keeping in view the GP/NP rates, shown in past and in subsequent years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee submitted that in this line of business the profit earned by the assessee works out to around 18% whereas the learned CIT(A) has taken into consideration 25% of the purchases as income which increases the gross profit rate and hence it deserves to be scaled down bearing in mind the normal profit earned in this line of business. However, as can be seen from the summary of gross profit chart filed for A.Y. 2008-09 to 2013-14 assessee declared gross profit varying between 18.85 to 22.45%. In the case of bogus purchase the learned CIT(A) observed that assessee would have saved on sale tax and other such levies on account of purchase made in the grey market and therefore 25% is reasonable. The learned D.R. in this regard submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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