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TMI Blog2017 (9) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to tax. X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 were also served upon the assessee on 10.09.2013. The assessment was completed u/s. 143(3) r.w.s 147 of the Act, on 31.01.2014. While passing assessment order, the Assessing Office disallowed a sum of ₹ 6,13,952/- on account of bogus purchases. The Assessing Officer disallowed the purchases of ₹ 1,15,061/- from Sahyog Enterprises, ₹ 2,03,060/- from Bhavika Enterprises and ₹ 2,95,831/- from Supreme Enterprises. The Assessing Officer added 100% of the amount incurred on alleged bogus purchases. He further disallowed the claim of bad debts amounting to ₹ 7,12,766/- u/s. 36(1)(iii) of the Act. On appeal, the CIT(A) sustained the addition on account of bogus purchases. However, no decision was given on the ground of appeal relating to disallowance of bad debt. Aggrieved, the assessee is in appeal before us. 6. We have heard the learned AR of the assessee and DR for the Revenue. We have also perused the material available on record along with the orders of the authorities below. The learned AR of the assessee argued that during the assessment proceedings, the assessee provided copies of bills/vouchers and delivery challans. Further, the assessee furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties, who awards contract and, thus, consumption cannot be inflated arbitrarily to reduce profit. On the basis of above observation, the learned CIT(A) concluded that the assessee failed to explain the genuineness of the purchases. The learned CIT(A) also examined the working of peak for the relevant period and confirmed the entire disallowance. We have noted that no independent inquiry was made by the lower authorities. The lower authorities made addition of 100% of the purchases made from all the three parties. In our view, the addition was made on the basis of third party information. Under the Income Tax Act, Income Tax Authorities are entitled to tax the real income. Even if the transactions is not verifiable the only taxable amount is the taxable income component therein and not the entire transactions. We are of the view that in order to fulfill the gap of revenue leakage, the disallowance of reasonable percentage of alleged bogus purchase must meet the ends of justice. Considering the facts of the present case, we restrict the addition @12.5% of the alleged bogus purchases (12.5% of 6,13,952/-). The Hon'ble Bombay High Court in the case of CIT vs. Hariram Bhambhan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Considering the fact that we have restricted similar disallowance @12.5% of the alleged bogus purchase for the A.Ys. 2006-07 and 2007-08 in the preceding paragraphs, following the principle of consistency, we direct the Assessing Officer to restrict the disallowance to 12.5% (12.5% of ₹ 83,50,600/) Appeal is partly allowed. 13. ITA No.1939/Mum/2015 for A.Y. 2009-10: In this appeal also the grounds raised by the assessee are similar to those in A.Ys. 2006-07, 2007-08 and 2008-09. We noted that the Assessing Officer disallowed a sum of ₹ 50,10,870/- on account of alleged bogus purchases as in preceding assessment year from the very same parties viz. Bhavika Enterprises, Sahyog Enterprises and Supreme Enterprises. On appeal, CIT(A) confirmed the action of the Assessing Officer. Considering the fact that we have restricted similar disallowance @12.5% of the alleged bogus purchase for the A.Ys. 2006-07, 2007-08 and 2008-09 in the preceding paragraphs, following the principle of consistency, we direct the Assessing Officer to restrict the disallowance to 12.5% (12.5% of ₹ 50,17,870/-) Appeal is partly allowed. 14. Now coming to the Revenue's appeal in ITA No. 1976/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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