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TMI Blog2017 (8) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases, but not the entire purchases from these parties. In this case, the assessee is involved in specialized business of providing lifting solutions of heavy equipment from the ground level to the critical point of its final placement which requires specialized skills and knowledge. The assessee also declared a gross profit of 37% on its gross receipts. Keeping in view overall facts and circumstances of the case, we are of the considered view that a reasonable net profit of 12.5% on total bogus purchases would be sufficient to meet the ends of justice. Hence, we direct the AO to estimate net profit of 12.5% on total purchases made from the above two parties. - Decided partly in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... vity of providing lifting solutions of heavy equipment from the ground level to the critical point of its final placement. These raw materials were sent to different places of work. In this regard, the assessee has furnished details of purchase order, invoices, delivery challans, consignment note and bank statement showing payment details against the purchase bills through proper banking channel. The AO, after considering the relevant submissions of the assessee and also relying upon certain judicial precedents observed that in view of the detailed investigation carried out by the Sales-tax Department, Mumbai and their findings coupled with statement of the parties admitting the fact of issuance of bogus bills and non furnishing of documentary evidences to establish genuineness of such purchases, the purchases made from the alleged parties were treated as bogus purchases. The assessee has failed to furnish any evidence to rebut the findings. And that these transactions have resulted into reducing the profits of the assessee by inflating the purchases and hence, the total purchases made from the above two parties amounting to ₹ 53,32,228 was treated as unexplained expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared in this line of business. The AO has not brought on record any evidence to show that the assessee has received cash back from the suppliers. With these observations, the CIT(A) deleted the addition made by the AO towards bogus purchases. Aggrieved by the order of CIT(A), the revenue is in appeal before us. 6. The Ld. DR submitted that the Ld. CIT(A) erred in not appreciating the fact that the supplier has admitted before sales-tax authorities that they were involved in providing accommodation entries without actual delivery of goods. Though the assessee has filed certain evidences in the form of purchase bills and payment proof, but failed to rebut the allegations made by the AO in the backdrop of findings of the Maharashtra Sales-tax department, which confirmed that the said parties were involved in providing accommodation entries. The assessee failed to produce the parties in person and also when the AO has issued notices to the above parties, the notices were returned unserved with the remark, "no such parties are available". The Ld. DR further referring to the decision of Hon'ble Supreme Court in the case of NK Proteins Ltd in SLP 759 of 2017 dated 16-01-2017 submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and also relied upon the decision of ITAT while deleting the addition made by the AO and his order should be upheld. 9. We have heard both the parties and perused materials available on record and also gone through the orders of authorities below. The AO disallowed purchases from two parties, viz.M/s Rushabh Enterprises and M/s Swastik Enterprises, on the basis of list of hawala operators published by Maharashtra Sales-tax Department which contained the name of above parties. The notices sent to these parties were returned unserved by postal authorities with remark, "no such parties are existed at the given address". Under these circumstances, the AO was of the opinion that the assessee failed to discharge onus cast upon it to prove the purchases with necessary evidence. The AO further was of the opinion that although assessee has furnished certain evidence in the form of purchase bills and payment details failed to rebut the allegations made in the backdrop of observations of Sales-tax department which found that the said parties were involved in providing accommodation entries without actual delivery of goods. Therefore, he opined that purchases from above parties are bogus i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yardsticks could be applied to estimate net profit because various of various nature of risk involved in various types of business. In this case, the assessee is involved in specialized business of providing lifting solutions of heavy equipment from the ground level to the critical point of its final placement which requires specialized skills and knowledge. The assessee also declared a gross profit of 37% on its gross receipts. Keeping in view overall facts and circumstances of the case, we are of the considered view that a reasonable net profit of 12.5% on total bogus purchases would be sufficient to meet the ends of justice. Hence, we direct the AO to estimate net profit of 12.5% on total purchases made from the above two parties. 12. In the result, appeal filed by the revenue for AY 2009-10 is partly allowed. 13. With regard to the other appeal in ITA No.4558/Mum/2015 for AY 2010- 11, also filed by the revenue, we find that the facts and circumstances of the addition are akin to assessment year 2009-10 except for the figures, which we have already decided in foregoing paragraphs. Therefore, consistent with the decision already arrived at for AY 2008-09, we direct the AO to e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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