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TMI Blog2020 (9) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... application order for the same year in M.A.No. 504/Mum/2019 order dated 7.2.2020. 3. Per contra, learned Departmental Representative Shri Sanjay Singh, CIT-DR and Shri Vinodkumar, Senior AR-CIT could not dispute this proposition that in assessee's own case the ITAT has taken a decision which has not been reversed by Hon'ble Jurisdictional High Court. 4. Since the facts are identical we are referring to facts and figures for A.Y. 2008-09. 5. Brief facts are that the assessee is in the business of supply of iron & steel. As per information which was received from the DDIT(lnv.), Mumbai to the effect that Shri Deveri Ashiwn Sanghavi, Prop, of M/s. Devdhar Steel had obtained accommodation purchase bills from various entities listed in Sales Tax Website which were declared as Hawala dealers by the Sales Tax Department, Mumbai. A survey u/s 133A of the Act was conducted in the assessee case on 21.11.2012 at Ginraj Building Sant Tukaram Road, Carnac Bunder, Mumbai, by the DDIT(Inv.), Unit-III, Mumbai. The list of suspicious dealers who indulge in issuing only bills without delivering any goods or materials is given on the official website of the Sales Tax Department, Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment made to the parties mentioned in the reasons of reopening. In response to above notices, the appellant has submitted letter dated 20.02.2015 with regard to thirteen parties listed in the aforesaid notice considered by Assessing Officer as to be 'bogus' based on MVAT' list and providing a show cause for not considering transactions with them as sham and to add back the amount involved of the transactions to appellant income, he submitted as follows: "(i) AO has referred to the list placed by the MVAT Department on their site listing the names of parties who are considered by the said Department as "Hawala or Suspicious Dealers". These parties have been listed by the said department based on their suspicious deals or behaviors or providing declarations to the said department about their having indulged in Havala Transactions. That it is well known that the said department has provided the list for caution to the public in dealing with them since they have had defaults in their compliances about filing of the returns or payment of the dues under MVAT. However, the said department has not confirmed the fact by making the assessment of their dealings as Hawala dealers. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance to 15%. Learned CIT(A) observed as under :- "6. The Grounds of Appeal from 4 to 8, the appellant has challenged the addition of Rs. 3,92,15,251/- on account of bogus purchases that are treated as unexplained expenses on purchases u/s 69C of the Act. Similar issue has been decided on similar facts and grounds in the Appeal No. CIT(A)-31/IT-18/ITO-20(2)(1)/13-14 vide order dated 15.03.2016 FOR A.Y. 2010-11 in appellant's own case at para 5. Keeping in mind the totality of circumstances as discussed above and the fact that the appellant has not brought on record any evidence to corroborate his arguments during appellate proceedings, and by following my own order in appellant's case for AY 2010-11, it is adequate to meet the ends of justice, when the disallowance has been restricted, to 15 percent of the bogus purchases of Rs. 3,92,15,251/- which amounts to Rs. 58,82,288/-. The AO is, therefore, directed to restrict the disallowance as above. The appellant, therefore gets a relief of Rs. 3,33,32,963/-. The AO is therefore directed to restrict the disallowance as above. The grounds of appeal are partly allowed. This ensures that only the real income gets subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Assessing Officer or the CIT (A), one could not conclude that the purchases were not made by the assessee. In the case of CIT vs. Simit P. Sheth 38 taxman.com 385 (Guj), the Hon'ble Gujarat High Court upheld the addition of 12.5% sustained by the Tribunal (applicable VAT @ 10% plus profit of 2.5%) on the ground that in the case of bogus purchases only profit element embedded in sale of such purchases should be added. We further notice that the AO has made addition of the entire amount of bogus purchases determined during the assessment proceedings, which is contrary to the findings of the Hon'ble Gujarat High Court. The AO has not rejected the sales made by the assessee. Once the sales are admitted the purchases cannot be rejected as there cannot be any sale without purchases. In the present case, the evidence on record is not sufficient to prove the genuineness of the purchases from the 13 hawala entities, therefore, Ld. CIT (A) has rightly sustained the addition estimating the profit element embedded in the questioned purchases and the corresponding sales. Now the question arises as to whether 15% addition of the total amount of bogus purchases is reasonable in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. In the result, misc. application filed by the assessee for assessment year 2010-11 is partly allowed." 15. We find that the facts in the present case are identical. The ITAT for A.Y. 2010-11 on same facts as directed that the addition should be restricted to 6.5% of the bogus purchases. Thereafter in Miscellaneous Application the ITAT has taken note of assessee's payment of 4% MVAT and thereafter it has directed that addition should be restricted to 2.5%. 16. We note that no case has been made out of the above decision of the ITAT in assessee's own case in Income tax appeals as well as Miscellaneous Application have been reversed by Hon'ble Jurisdictional High Court. In this view of the matter, we have to respectfully follow the Coordinate Bench decision. 17. In this view of the matter, we admit additional evidence being MVAT paid by the assessee for the concerned assessment years on the impugned purchases. We direct the Assessing Officer to examine the veracity of these MVAT paid @ 4% by the assessee. If the same are found in order, in accordance with the ITAT decision as above addition should be restricted to 2.5% of the impugned purchases. 18. In the result, these a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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