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TMI Blog2017 (9) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly. Addition on account of Foreign Exchange Forward Contract - Held that:- We have seen that the ld Commissioner (Appeals) has allowed foreign exchange fluctuation loss by following the decision of DCIT versus Bank of Bahrain [2010 (8) TMI 578 - ITAT, MUMBAI ]. We have seen that the finding of branded Commissioner (Appeals) is based on the various decision of Tribunal. Hence we do not find any illegality and infirmity in the order passed by ld Commissioner (Appeals). In the result the ground of appeal raised by revenue is dismissed. - ITA No.5877/Mum/2016 And ITA No. 6724/M/2016 - - - Dated:- 5-9-2017 - SHRI P.K. BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Assessee : Sh. Vijay Mehta- AR For The Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6/- made by AO on account of disallowing of loss on account of revaluation of outstanding foreign exchange forward contract and not appreciating the fact that the said loss was an unascertained liability being a notional loss and hence are not to be allowed. 3. Brief facts of the case are that the assessee is a Partnership firm, during the year under consideration the assessee has shown income from the business of trading, manufacturing and exporting of Diamonds. The assessee filed its return of income for relevant assessment year on 29 September 2012 declaring total income of ₹ 5,09,90,126/-. The assessment was completed under section 143(3) of the Act on 27th of March 2015. The assessing officer while passing assessment order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion related with the bogus purchases. The ld AR of the assessee further relied on the assessment order passed under section 143 (3) dated 9 December 2016 passed by assessing officer in case of one K. Rajnikant Co. (PAN AAAFK1490J) wherein the assessing officer made the addition only @ 3% of the purchase cost from the similar parties. The ld AR brought our attention that this assessment order was also based on the search and survey action conducted in case of Bhanwarlal Jain Group. On the other hand, the ld. DR for the Revenue supported the orders of authorities below. The ld. DR for the Revenue argued that the Investigation Wing of the Income-tax Department made full-fledged enquiry. The parties from whom the assessee has shown the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases from such hawala dealers which are disputed by the AO is shown in the following manner; Sr. No. Name of the party Amount Rs. 1 Prime Star 143508582 2 Mohit Enterprises 269153056 3 Mayur Exports 139211148 4 Abhinam Gems 47395057 5 Parvati Exports 2676300 6 Megha Gems 3761390 7 Total 59,94,05,533/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds were bought by the assessee from grey market (which is a common practice prevalent in Surat and Mumbai). The assessee to adjust the transaction into the books of account must have obtained the bills from hawala dealers. The assessing officer concluded that the genuineness of the parties is doubted but genuineness of purchases as a whole cannot be doubted. The assessing officer after examining the GP and the profit margin of diamond business made the addition @8% of the total purchases from hawala dealers. The ld. Commissioner (Appeals) while considering the grounds of appeal observed that the rate of VAT is stated to be 1% in Mumbai, on the purchases made under Form H no VAT it chargeable. The ld Commissioner( Appeals) further observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, but only the profit attributable on the total unrecorded transaction can be subject to income tax. After considering the facts and rival contentions of the parties, we are of the opinion that in order to fulfil the gap of revenue leakage the disallowance of reasonable percentage of impugned purchase would meet the end of justice. Thus, we are of the opinion that disallowance @ 3% on all bogus purchases shown from the alleged hawala dealer would meet the end of justice. We direct the assessing officer accordingly. 8. In the result grounds of appeal raised by assessee in its appeal is dismissed. 9. In the result appeal of the assessee is dismissed. Resultantly, the ground No.1 raised in revenues appeal is partly allowed. 10. Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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