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TMI Blog2017 (11) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... d as held by the Bombay High Court in the case of CIT v. Nikunj Eximp [2013 (1) TMI 88 - BOMBAY HIGH COURT]. Thus, following the above decision of the Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd (supra), We direct the Assessing Officer to restrict the disallowance to 12.5% of the purchases treated as non-genuine by estimating profit element in such bogus purchases. - ITA.No.2213/MUM/2016 - - - Dated:- 27-10-2017 - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI RAJESH KUMAR, HON'BLE ACCOUNTANT MEMBER For The Assessee : Shri Nimisha L. Bothra For The Revenue : Shri M.C. Omi Ningshen ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax Department, Government of Maharashtra that M/s. Ronak Industries is indulged only in providing the accommodation entries. Since the assessee could not produce the party nor confirmations were furnished, Assessing Officer treated the Books of Accounts as non-genuine/not complete and the same were rejected invoking provisions of section 145(3) of the Act. Having rejected the Books of Accounts the Assessing Officer estimated the Gross Profit at 13.76% and treated addition of ₹.86,89,450/- as income of the assessee which the Ld.CIT(A) sustained. 4. Before us the Learned Counsel for the assessee submits that assessee is into trading business of Ferrous and Non-ferrous metals. Learned Counsel for the assessee submits that in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Gross Profit rate estimated by the Assessing Officer at 13.76% is erroneous and misleading. Learned Counsel for the assessee submits that there is no much variation in Gross Profit rate shown by the assessee in all these three Assessment Years. Learned Counsel for the assessee further submits that the Assessing Officer having accepted the sales, the entire purchases cannot be treated as bogus purchases. He also Placed reliance on the following decisions in its support: - ( i) CIT v. Simit P. Seth, (2013) 356 ITR 451 (GUJ) ( ii) CIT v. Bholanath Polyfab Pvt. Ltd. (2013) 355 ITR 290 (Guj) ( iii) CIT v. Satyanarayan P. Rathi (2013) 355 ITR 150 (GUJ) ( iv) ITO v. Sunsteel (2005) 92 TTJ (Ahd) 1126 (v) Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the sales. Without there being any purchases, there could not be any sales. It is also not proved by the Assessing Officer that the amounts paid by the Assessee to the dealers were returned back to the Assessee and the purchase bills issued are only accommodation entries. Simply because the Assessee could not produce the dealers, the entire purchases cannot be treated as bogus purchases. The Assessing Officer could have made further investigations to ascertain the genuineness of the transactions. 7. We find that on identical situation and facts, the Coordinate Bench of the Tribunal in the case of ITO Vs. Sanjay V Dhruv in ITA No.5089/2014, dated 29.02.2016 held that the purchases cannot be treated as bogus purchases and additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record to conclusively establish the fact that purchases are bogus. Merely relying upon the information from the Sales Tax Department or the fact that parties were not produced the Assessing Officer could not have treated the purchases as bogus and made addition. If the Assessing Officer had any doubt with regard to purchases made, it was incumbent upon him to make further investigation to ascertain the genuineness of the transactions. Without making any enquiry or investigation the Assessing Officer cannot sit back and make the addition by simply relying upon the information obtained from the Sales Tax Department and issuing notices under section 133(6) of the Act. As the Assessing Officer has failed to make any enquiry or investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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