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TMI Blog2017 (3) TMI 1818X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable addition should be made. Reasonable to sustain the addition @5% of the total purchases to cover and compensate for the saving made by the assessee by making purchases from grey market. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to made the addition @ 5% in place of 40% by the ld CIT of bogus purchases. - Decided partly in favour of assessee. - ITA NO. 2975/Mum/2015 - - - Dated:- 14-3-2017 - SHRI C.N. PRASAD, JM AND SHRI RAJESH KUMAR, AM For the Assessee : Shri Devendra H Jain For the Revenue : Shri H M Wanare ORDER PER RAJESH KUMAR, A. M: This is an appeal filed by the assessee against the order dated 16.3.2015 passed by the ld.CIT(A)-2, Thane for the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening of the assessment. Thereafter a notices u/s 143(2) and 142(1) were issued to the assessee to attend before the AO on 3.10.2013 alongwith questionnaire calling for certain information. In response to it, the assessee submitted that the return of income filed on 14.9.2009 be treated as return of income filed in response to notice u/s 148 of the Act. The copy of the reasons for reopening of the assessment was also supplied to the assessee. During the year, the AO observed that the assessee has shown purchases of ₹ 25,07,989/- from (a) Prayan Trading Co. (b) M/s Vitrag Trading Co. and (c) Sampark Steels. The submissions submitted by the assessee did not satisfy the AO as he was of the opinion after considering the reply and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually sold the goods to the assessee. The ld. AR pointed out that the material was received through delivery challans and payment thereof made through cheques and banking channels. The ld. AR tried to explain by his arguments by referring to the stock tally register and details of material received from the alleged hawala operators which were duly entered in the stock register and also recorded in the issue columns upon sale and consideration purchases and received form sales thereof. In support of his contention the ld. AR relief on the following case law: A) CIT v.Nikunj Eximp Enterprises (P.) Ltd. [2013] 35 taxmann.com 384 (Bombay) B) Babulal C. BoranaV/s ITO [2005] 144 TAXMAN 674 (BOM.) C) ITO V/s Vaman International P Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the materials were received and sold and duly accounted for and therefore it is not the case where the accommodation entries were taken to suppress the income of the assessee. Therefore, we are of the view that the purchases made by the assessee stand proved. However the disallowance as sustained by the FAA appears to be unreasonable and excessive and therefore cannot be sustained. On the other hand, in order to plug the leakages of revenue due to the possibility of purchasing goods from the gray market as generally the case is and thus savings made on account of sales tax, octroi and other charges, some reasonable addition should be made. Under the given circumstances and facts we are of the view that it would be reasonable to sust ..... X X X X Extracts X X X X X X X X Extracts X X X X
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