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TMI Blog2019 (9) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... the remand report is very reasoned order. Accordingly, we do not find any reason to interfere with the order of CIT(A) upholding the addition on account of bogus purchases to the extent of 12.5% less G.P. already declared by the assessee in the last purchase. - ITA Nos.5536 to 5538/Mum/2017, C.O. No. 336 to 338/Mum/2018 (Arising out of ITA Nos. 5536 to 5538/Mum/2017 - - - Dated:- 18-9-2019 - Shri Ramesh C Sharma, Accountant Member And Shri Pawan Singh, Judicial Member For the Appellant : Shri B. Sriniwas (CIT-DR) For the Respondent : Shri Paresh Sapharia (A.R.) ORDER PER: R.C. SHARMA, AM: These are the appeals filed by the revenue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claring total income of ₹ 4,54,79,0207- for A.Y. 2008-09, ₹ 4,92,00,310/- for A.Y.2009-10 and ₹ 16,00,22,610/-for A.Y. 2010-11 respectively. Assessment U/s. 153A r.w.s 143(3) of the Act was completed on 31.3.2014 for all the three assessment years determining total income at ₹ 19,52,47,410/-, ₹ 16,56,00,750/- and ₹ 26,15,78,450/- respectively. 5. By the impugned order, the ld. CIT(A) restricted the addition to the extent of 12.5% of such purchases less G.P. already declared by the assessee on such purchases. Precise observation of the ld. CIT(A) was as under: 8.3.5. Addition of entire bogus purchase to total income : The A.O. has made an addition of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues, it is observed as under: (i) The appellant company is a trader in Iron Steel. In so far as the purchases from SCIL/ KIL are concerned, it has been noted in para 8.3.3 above that the purchases, which are supported by excise tax invoice of Kavi Commercial and Sanvijay Rolling, have been used to inflate the purchases and as noted in para 8.3.4 above, the balance purchase from KIL are not supported by proof of delivery to the appellant company. The confirmation from the director of KIL merely states the obvious that the purchases have been made by way of bills/invoices and payment have been made by way of cheque, but it does not explain the non-existence of proof of delivery or the reasons for price differential ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h purchases and sales have been recorded in the books of account by the appellant, the correctness of the purchases made from KIL/SCIL is not established and therefore the books of account, to that extent, are found to be incorrect in terms of Section 145(3) of the Act. The A.O. has treated the entire such purchases as bogus and added the same to the income of the appellant and the rejection of the appellant's books of accounts in terms of Section 145(3) is found to be implicit in such action of the A.O. However, the rejection of books of account has to be followed by a reasonable estimate of the income based on the facts and circumstances of the case. In this case, the appellant is a trader whose purchases have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers resulting in an element of profit/gains on such purchases on account of lower cost on cash purchases vis-a-vis the purchase price shown in the bills from KIL. Therefore, I am of the considered opinion that instead of making the addition of entire purchases from KIL/SCIL to the income of the appellant, it would be appropriate to make an addition considering the profit element in respect of such unverifiable purchases and/or in respect of buyer- consignee purchases. In this regard, I find that in the case of MenuI K Mehta I T.A. No.3227/Mum/2016 (ITAT Mumbai) (14-03-2017) and in the case of Ratnagiri Stainless Steel Pvt. Limited I.T.A. No. 4463/Mum/2016 (ITAT Mumbai) (04-04-2017) it has been held that estimating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the authorities below and found from the record that there was a search action U/s 132 on Bharti Shipyard Limited (BSL) Group on 24/11/2011. There were allegation that BSL has been inflating its expenses by taking accommodation entries of purchases from one M/s Karma Ispat Limited (KIL)/Scana Color (India) Limited (SCIL) and has also routed accommodation entries from KIL/SCIL through the assessee. Based on the above allegations there was search in the office premises of the assessee on 24/11/2011 and in the course of search proceedings, statement U/s 132(4) dated 24/11/2012 was recorded of Mr. Ketan P. Kamdar, director of the assessee company. The Assessing Officer alleged purchases from these parties as bogus. During the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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