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TMI Blog2019 (12) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case and the rival contentions of the parties we are of the opinion that in order to fulfill the gap of revenue leakage the disallowance of reasonable percentage of such purchases would meet the end of justice. The Hon ble Bombay High Court in CIT Vs Hariram Bhambhani [ 2015 (2) TMI 907 - BOMBAY HIGH COURT] held that revenue is not entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sales consideration alone can be subject to income tax. Considering the facts of the present case the disallowance on account of bogus purchases is restricted to 12% of the total impugned (disputed) purchases. The assessing officer is directed accordingly. - ITA No. 5788/Mum/2016 (Assessment Year 2009-10) - - - Dated:- 4-11-2019 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER Appellant by: Ms. Kiran Doifode (AR) Respondent by: Shri Manoj Kumar Singh (DR) ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 4.73% in AY 2009-2010, and therefore the Ld CIT ought to have worked out on the basis of average gross profit of AY 2007-08 (2.97%) and AY 2008-09 (5.20%) non hawala years, which would be 4.90% and therefore the suppressed profit would come to 0.17% (4.90% (-) 4.73% which works out to ₹ 2,22,452/- (13,08,53,927 x 0.17/100). G. The Appellant craves leave of this Hon'ble Tribunal to add, delete, amend or modify any of the above grounds if necessary before the Appeal is finally decided. 2. Brief facts of the case are that the assessee is engaged in the business of yarn processing dyeing, filed his return of income on 31.08.2009 declaring total income of ₹ 8,99,460/- for Assessment Year 2009-10. The return of income was processed under section 143(1). The case was selected for scrutiny and assessment was completed under section 143(3) on 31.03.2011 assessing total income at ₹ 939460/-. Thereafter, the case was re-opened under section 147 on the basis of information received from Sale Tax Department, Government of Maharashtra that certain hawala operators are indulging in providing accommodation bills without actual delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from all three parties while passing the assessment order on 16.01.2014 passed under section 143(3) r.w.s. 147. 4. Aggrieved by the additions of 100% disallowance of the alleged bogus purchases, in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee made elaborate submission and also furnished various evidences to substantiate the genuineness of the purchases and submitted that the disputed purchases from three parties are only 0.27% against total purchases of ₹ 11,12,68,521/-. The assessee also furnish the Gross Profit (GP) and Net Profit (NP) ratio shown by assessee for Assessment Year 2007-08 to 2011-12, which is recorded by ld. CIT(A) in para-9.10 of the impugned order. The ld. CIT(A) after considering the submission of the assessee held that the assessee had suppressed profit by booking hawala purchases and restricted the disallowances to the extent of 25% of the disputed purchases, which was worked out to be ₹ 2,42,173/-. The ld. CIT(A) by taking view that the disallowance of hawala purchases is less than the suppressed GP, therefore, the disallowance was restricted to the extent of suppressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 30.06.2016 was received by assessee on 16.07.2016, the partner of the assessee firm who is taking care of day to day affair was observing Jain Parushan from 29th August 2016 to 5th September 2016 and thereafter attended pilgrimage at Pali Thana Jain Temple and return to Mumbai on 13.09.2016 and the appeal was filed immediately after proper consultation with Advocate on 27.09.2016. The delay is neither intentional nor deliberate and the Bench may take a lenient view in condoning the delay as the assessee has good case on merit. 7. On the other hand, the ld. DR for the revenue on the issue of condonation of delay submits that the bench may take appropriate decision as per their discretion. 8. On merit, the ld. Departmental Representative (DR) for the revenue supported the order of lower authorities. The ld. DR further submits that Investigation Wing of Income-tax Department has made full-fledged investigation in respect of hawala traders. The hawala traders were/are engaged in providing bogus bill without actual delivery of goods. The assessee has shown bogus purchases only to inflate the profit. The ld. DR for the revenue submits that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se was sustained. The ld AR for the assessee vehemently submitted that the disallowances sustained by ld CIT(A is on higher side and that the assessee for the year under consideration has already declared GP @ 4.73%. We have that in the AY 2007-08 the assessee declared GP @ 2.97%, in AY 2008-09 @ 5.20% and during the under consideration (AY 2009-10) @ 4.73% and in subsequent years the assessee declared GP @ 3.73% for AY 2010-11 and at 3.44% for AY 2011-12 respectively. Considering the GP ration declared by the assessee, the disallowances sustained by ld CIT(A) is on higher side. 11. We are of the considered opinion that under Income Tax Act only real income can be taxed by the Revenue. We may further conclude that even if the transaction is not verifiable, the only taxable is the taxable income component and not the entire transaction. And after considering the facts of the case and the rival contentions of the parties we are of the opinion that in order to fulfill the gap of revenue leakage the disallowance of reasonable percentage of such purchases would meet the end of justice. The Hon ble Bombay High Court in CIT Vs Hariram Bhambhani in ITA No. 313 of 2013 deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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