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TMI Blog2017 (1) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was not doubted by ld Commissioner (Appeals) the disallowance restricted @23% to our opinion is at higher side. Thus as per our considered opinion the disallowance @ 15% of total impugned purchases would be sufficient to meet the end of Justice. We accordingly direct the AO to calculate the disallowance is of impugned bogus purchases @15% of total cost of impugned purchases. With this observation the appeal of the assessee is partly allowed. - ITA No.7359/Mum/2014, ITA No.7520/Mum/2014 - - - Dated:- 18-11-2016 - SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Revenue : Ms. Beena Santosh -DR For The Assessee : Sh. Jetendra Singh and Ms Neha Paranjpe - AR Order under section 254(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and perused the material available on record. First Ground of Revenue s appeals relates to deletion of disallowance of interest of ₹ 2,82,837/-. Neither the ld DR for revenue nor the AR for assessee argued anything against this ground. We have perused the order of the authorities below. We have seen that during the assessment AO noticed that assessee received interest of ₹ 15,54,503/- from the its sister concern. The assessee was asked to submit details of the interest received and paid. The assessee furnished the reply and contended that that assessee borrowed the money for the purpose of business only. The rate of interest at which interest is paid ranges from 6% to 15% of which relate present sister concern are paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the present case when the assessee has sufficient surplus fund available with them at their disposal to lend to its sister concern at lower rate of interest compared to the other nonrelated parties no disallowance was warranted. Hence, we do not find any infirmity or illegality in the order passed by Commissioner (Appeals) which require our interference. Thus this ground of appeal raised by the revenue is dismissed. 4. The second Ground (Ground No. 2 to 5) raised by revenue relates to sustaining the disallowance of bogus purchases @ 23% of the total purchases. The learned DR of the revenue strongly relied upon the order of AO and further argued that assessee failed to prove the genuineness of purchases. It was argued that during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO not doubted the sale of the assessee. During the assessment preceding assessee produce the bills of material purchased from the parties. The name and address of the parties were mentioned on the bill itself, none of the party is found to be non-existent. The AO not issued the notice under section 133(6) nor summoned anyone of them by invoking power under section 131 of the Act. The ld AR of the assessee argued that the addition on account of bogus purchases sustained by ld Commissioner (Appeals) @ 23% is at higher side when the GP rate was lower. It was argued by ld AR of the assessee that the assessee purchased the material by way of genuine transaction and prayed that a lenient view may be taken while considering this ground of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery challans, record relating to received and dispatch of goods purchased from the above parties and to show the document related with packaging. The assessee filed his reply vide reply dated 8 March 2013 and submitted that in respect of purchases the invoices were received and maintained, so far challans are concerned the assessee submitted that he does not keep challans for purchases since payment are made after due verification. The contention of assessee was not accepted by AO holding that no proof of such delivery of goods like challans lorry receipt was submitted by the assessee and the AO made the addition of entire cost of purchases holding it as bogus purchases and made the addition under section 69C of the Act. The ld Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit there from for taxing in the return of income for the year under consideration. However, while concluding that the genuineness of the purchases made by assessee is not in doubt, what is doubt at this estate is the correctness of the purchase price shown on the invoices issued by the impugned parties. As the parties who had issued the bills are not available for verification, the purchase price shown on the invoices issued by those parties in question cannot be accepted in absence of proper verification and thus in such circumstances, it can be held that such purchases are over- invoiced resulting in lowering down the gross profit. Commissioner further concluded that assessee has shown gross profit of 20.16% during the year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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