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TMI Blog2017 (11) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... imed”. The assessee has failed to furnish correct addresses of the parties. Under these circumstances, it is very difficult to accept that the purchases from those parties are explained to the satisfaction of the AO. Considering the facts and circumstances of the case and also being consistent with the view taken by the co-ordinate bench, we are of the view that only profit element embedded in purchases needs to be taxed. Hence, we direct the AO to estimate net profit of 12.5% on total purchases made from the above parties. Appeal filed by the assessee is partly allowed. - I.T.A No.3022/Mum/2017 - - - Dated:- 31-10-2017 - Shri C.N. Prasad (JUDICIAL MEMBER) And Shri G Manjunatha (ACCOUNTANT MEMBER) For The Appellant : Shri M.V. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income at ₹ 15,82,091. Subsequently, on the basis of information received from the sales-tax department DGIT (Inv), assessment was reopened u/s 147 on the ground that income chargeable to tax had been escaped assessment on account of bogus purchases made from certain parties listed by Sales-tax department as hawala operators involved in providing accommodation entries. In response to notice u/s 148, assessee vide letter date 16-08-2013 requested to treat the return of income filed on 24-09-2009 as being filed in response to notice issued u/s 148 of I.T. Act, 1961. In response to notices issued u/s 143(2) and 142(1), the authorized representative of the assessee appeared from time to time and furnished the details, as called for. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appellate proceedings, the AO forwarded additional evidences filed by the assessee to the AO for his comments. The AO, vide his remand report dated 02-11-2016 opposed admission of additional evidence and also reiterated his findings in the assessment order. The CIT(A), after considering relevant submissions of the assessee and also relying upon certain judicial precedents observed that the AO had not carried out any enquiries with regard to actual supplies made by the assessee as the assessee has furnished complete details of purchases and sales. The CIT(A), further observed that the AO has not made any attempt to locate the alleged hawala parties, leave alone, verified their bank accounts to check if cash withdrawals had followed the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or such purchases has been made through proper banking channels. The assessee further contended that additions cannot be made towards purchases merely on the basis of third party information ignoring the evidences filed to justify purchases. The assessee further contended before the lower authorities that the AO neither pointed out any error or discrepancy in the books of account nor did make out any case of sales made outside the books of account. In the absence of any finding as to incorrectness of books of account, addition cannot be made towards bogus purchases. 5. Having heard, we find force in the contention of the assessee for the reasons that the AO has made additions only on the basis of information received from Maharashtra Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on record concluded that the assessee did purchase cloth and sold goods, the entire purchase would not be subjected to tax. In yet another case, the Hon ble Gujarat High Court in the case of Simit P Sheth (supra) has held that no uniform yardstick can be applied for estimation of net profit which is dependent upon facts and circumstances of each case. The co-ordinate bench of ITAT, Mumbai in several cases has taken a view that only the profit element embedded in bogus purchases needs to be taxed. Accordingly, estimated net profit of 12.5% on bogus purchases. Therefore, considering the facts and circumstances of the case and also being consistent with the view taken by the co-ordinate bench, we are of the view that only profit element em ..... X X X X Extracts X X X X X X X X Extracts X X X X
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