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TMI Blog2020 (9) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... by the revenue read as under:- 1. Whether, on the facts and in the circumstances of the case, the Ld.CIT(A) has erred in quashing the order passed u/s 143(3) by the A.O without appreciated the facts that sales Tax Department had made independent enquiry in case of each Hawal parties and the DGIT (inv), Mumbai also fortified the finding of the sales Tax Department that these parties are bogus. The assessee has not sought any cross examination nor denied any adverse evidence had only paper bills was merely issued. The assessee has also not explained the source of purchase of the goods. 2. Whether, on the facts and in the circumstances of the case, the Ld.CIT(A) has erred in quashing the order passed u/s 143(3) by the A.O and deleting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an appeal before the Ld.CIT(A). We find that vide order dated 26/06/2018, the Ld.CIT(A) restricted the disallowances to Rs. 64,89,180/- with the following reasons. "6. I have considered the submission made by the appellant and the reasons recorded by the AO. So far as first ground of appeal is concerned I find that the issue is covered by the decision of honourable ITAT, Mumbai in the case of the appellant for A.Y. 2011-12 in ITA No.768/Mum/2015 dated 06/01/2017 wherein on the same set of facts, the honourable Tribunal has upheld the order of the CIT(A) directing the AO to restrict the addition to 10% of the alleged nongenuine/ hawla purchases. Respectfully following the same, the AO is directed to restrict the addition to 10% of purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - "My main business is exports and my entire turnover represents export of goods which is purchased locally and out of Maharashtra. I am not a stockiest and that goods purchased by me all against the exports sales which can be directly verified. In this regard I am submitting the details of purchases and sales showing quantitative details of month wise purchases viz-a-viz export carried out by me. You will appreciate that all the export are required to be verified by the authorities from customs and excise department. We already submitted the copies of bill of landing as well as copies of customs clearance certificate along with the commercial invoice & delivery challans for your ready reference and record. Compared with the copies of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases were not genuine. The AO noticed that the assessee had shown purchases of fabrics worth Rs. 29.41 lakhs from three group concerns, namely M/s Manoj Mills, M/s Astha Silk Industries and M/s Shri Ram Sales and Synthetics. On the basis of statement recorded during such survey operations, the AO concluded that the selling parties were engaged only in supplying the bogus bills, that the goods in question were never supplied to the assessee, and therefore, the purchases were bogus. He, therefore, added the entire sum in the hands of the assessee as its additional income. The assessee carried the matter in appeal before the CIT(A), who accepted the factum of purchases being bogus. However, he compared the purchases and sales statements of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon'ble Supreme Court. The Hon'ble Bombay High Court held : "8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ially in favour of the assessee and partially in favour of the revenue." We find that the facts in the instant case are similar to the above decision. Following the same, we direct the AO to restrict the addition limited to the extent of bringing the G.P. rate on disputed purchases at the same rate of other genuine purchases. 10.1 In the result, the first ground of appeal by the revenue and the cross objection filed by the assessee are partly allowed. 11. Now, we turn to the second ground of appeal filed by the revenue. The issue is the disallowance of interest amounting to Rs. 13,08,770/- made by the AO. The Ld.CIT(A), deleted the said addition on the ground that the interest free funds available with the assessee at the beginning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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