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TMI Blog2020 (4) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... on to 25% profit - HELD THAT:- In a situation where purchase is made from alleged hawala dealers, various High Courts and Tribunals had considered an identical issue in light of investigation carried out by the Sales Tax Department and held that in case purchases claims to have made from alleged hawala dealers, only profit element embedded in those purchases needs to be taxed, but not total purchase from those parties. In the case of CIT vs Simith P.Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] considered a similar issue and held that at the time of estimation of profit from alleged bogus purchases no uniform yardsticks could be adopted, but it depends upon facts of each case - considering the nature of business of the assessee both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the disallowance of ₹ 2,80,195/- under section 69C of the Act is against the principle of natural justice and the same may be deleted. 3. The brief facts of the case are that the assessee is a partnership firm which is engaged in the business of builder and developer, filed its return of income for AY 2007-08 on 1/10/2009. A search and seizure action u/s 132 of the Act was carried out on the group companies of Hicon Group on 24/02/2009. The assessment has been completed u/s 143(3) r.w.s. 153C on 30/12/2010 assessing the total income of ₹ 26,61,580/-. Subsequently, the case has been reopened u/s 147 of the Act, on the basis of information received from DGIT, investigation, Mumbai, as per which, Sales Tax Authorities of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from third party. The Ld.CIT(A), after considering relevant submission of the assessee and also, by following various decisions, scaled down addition towards bogus purchases to 25% profit on such alleged bogus purchases. The relevant findings of the Ld.CIT(A) are as under:- 6.3 On merits it is noted that the Tax Audit Report states that quantitative accounts are not maintained. The income and profits reflected in audited accounts and returns of income filed are as tabulated below. AY 2007-08 AY 2008-09 AY 2009-10 AY 2010-11 Project Income 17,96,996 25,44,757 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per seized documents was claimed as ₹ 4.87 crores. If the on-money is included in project sales, the profit disclosed on the project comes down to 25.6%, However, the disallowance made by the assessing officer results in net profit on project at 38.22%. This certainly is quite high and out of industry norms. This, in my view, suggests that the purchases are made, but from elsewhere. 6.5. Even if materials have been purchased,, they are not purchased form these parties and may be in cash from un-disclosed parties. By purchasing from the grey market, the appellant would have benefitted by the savings of taxes. Direct statement of shri Gupta applies to purchases from only two entities via. Muni Trade P, Ltd and Yashobhumi Trader ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment and hence, we reject legal ground taken by the assessee. 6. In sofar as addition towards alleged bogus purchases, we find that the Ld. AO has made 100% additions towards alleged bogus purchases, on the ground that the assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers. According to the Ld. AO, although assesee has filed certain basic evidences, but failed to file further evidence in the backdrop of clear finding by the Sales Tax Department, Maharashtra that those parties are involved in providing accommodation entries without actual delivery of goods. The Ld. AO had also taken support from the investigation conducted during the course of assessment proceedings, as per which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged hawala dealers, only profit element embedded in those purchases needs to be taxed, but not total purchase from those parties. The Hon ble Gujarat High Court, in the case of CIT vs Simith P.Sheth 356 ITR 451 had considered a similar issue and held that at the time of estimation of profit from alleged bogus purchases no uniform yardsticks could be adopted, but it depends upon facts of each case. The ITAT, Mumbai, in number of cases had considered an identical issue and depending upon facts of each case, directed the Ld.AO to estimate profit of 10 to 15% on total alleged bogus purchases. In this case, considering the nature of business of the assessee the Ld. AO has estimated 100% profit, whereas the ld. CIT(A) has restricted addition to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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