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TMI Blog2019 (7) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance of the purchases of Rs. 81,76,272/- shown from two accommodation entry provider concern, to 12% by simply ignoring the fact that in this case the AO had held entire purchases to the tune of Rs. 81,76,272/- themselves as bogus and as such the instant case was not merely a case where the party from whom such purchases were allegedly made was acting as conduit between the assessee and the actual sellers of the material. b) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the then AO called upon the assessee to prove the genuineness of the purchases to the tune of Rs. 81,76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 51,18,7507- on the alleged purchase of plant & machinery without appreciating the fact that the purchase of plant & machinery is through bogus purchase that has been disallowed by the AO in A.Y.2009-10 which was not capitalized to qualify for claiming depreciation. Further, the entire bogus purchases of A.Y.2009-10 has been dismissed by the CIT(A) in limine." 2.1 Facts in brief are that the assessee being resident corporate assessee stated to be engaged in manufacturing of engineering goods, molds and dyes was subjected to re-assessment proceedings for impugned AY. The assessment was framed u/s 143(3) r.w.s. 147 on 11/03/2016 wherein income of the assessee was determined at Rs. 101.68 Lacs after certain additions as against returned inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance on account of depreciation for Rs. 6,52,641/- which was claimed @15% on Written Down Value of Certain Plant & Machinery since the capital expenditure of Rs. 51.18 Lacs on account of Plant & Machinery was disallowed in AY 2009-10. 3. Aggrieved, the assessee contested the stand of the Ld. AO on legal grounds as well as on merits. The Ld. CIT(A), after considering the factual matrix and relying upon various judicial decisions including the decision of Hon'ble Gujarat High Court rendered in CIT Vs. Simit P. Sheth [356 ITR 451] & CIT Vs. Bholanath Poly Fab. P. Ltd. [355 ITR 290, restricted the additions to 12% of alleged bogus purchases. The disallowance of depreciation was also directed to be recomputed after considering the profit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grey market and undue benefit of VAT against such bogus purchases, which Ld. first appellate authority has rightly done. Therefore, we do not find any infirmity in the same. 6. Our aforesaid view is in line with the recent decision of Hon'ble Bombay High Court rendered in bunch of appeals titled as Pr.CIT Vs. M/s Mohommad Haji Adam & Co. [ITA No.1004 & others of 2016, dated 11/02/2019] wherein Hon'ble Court distinguishing the cited case law of Hon'ble Gujarat High Court rendered in N.K. Industries Ltd. Vs Dy. C.I.T. in Tax Appeal No. 240 of 2003 and connected appeals decided on 20th June, 2016 observed as under: - 8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66%. Therefore, considering 5.66% of Rs. 3,70,78,125/- which comes to Rs. 20,98,621.88 we think it fit to direct the revenue to add Rs. 20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favor of the assessee and partially in favor of the revenue." 9 In these circumstances, no question of law, therefore, arises. All Income Tax Appeals are dismissed, accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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