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TMI Blog2021 (2) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue are dismissed. - ITA NO.4492/MUM/2019 (A.Y: 2009-10) - - - Dated:- 19-1-2021 - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER Assessee by: None Department by: Ms. Smita Verma ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals) 28, Mumbai [hereinafter in short Ld.CIT(A) ] dated 26.04.2019 for the Assessment Year 2009-10. The only grievance of the Revenue in its appeal is Ld.CIT(A) erred in restricting the disallowance of purchases to 12.5% as against the entire purchases disallowed as non-genuine/bogus by the Assessing Officer. 2. Briefly stated the facts are that, the assessee engaged in the business of trading in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties were not found at their address. Therefore, Assessing Officer treated entire purchases of ₹.7,47,697/- as non-genuine and added to the income of the assessee. On appeal the Ld.CIT(A) considering the evidences and various submissions of the assessee restricted the disallowance to an extent of 12.5% of the non-genuine purchases. 4. Inspite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought by the assessee. Therefore, I proceed to dispose off this appeal on hearing Ld. DR on merits. 5. Ld. DR vehemently supported the orders of the Assessing Officer. 6. Heard Ld.DR, perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A), I find that the Ld.CIT(A) cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter, an onerous obligation is cast upon the appellant to produce the parties to prove the genuineness of the transactions. Moreover, simply because the payments are made by cheque, that itself would not certify automatically that the transaction in question is aboveboard whose veracity has been totally established. 5.5. In view of the above, the claim of the appellant that the payments have been made by the a/c payee cheque also does not make the claim as bonafide in view of the judicial pronouncement made by Hon'ble Calcutta High Court in the case of CIT vs. Precision Finance Pvt. Ltd. 208 ITR 465 Cal. (1994). It was held that transaction through bank is not sufficient to prove a transaction as bonafide. Merely because the mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that amount was received by cheque, by itself does not conclusively prove the genuineness of the transaction. 5.7. Therefore, there is room for doubt that the veracity of the transactions of the bogus purchase is not established. At the same time it is also pertinent to note that it is also a fact that the AO has not been able to disprove or interfere with the sales of the appellant therefore relevant question would arrive as to how the sales have been effected if the entire purchase is to be taken as bogus in respect of the parties in question referred to above. Therefore, it is observed that only the embedded profit element in the transaction could be justifiably taxed and not the cent percent amount taken by the Ld.AO. 5.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or only the profit element embedded therein was to ascertained; and whether the purchases themselves were completely bogus and non-existent or that the purchases were actually made but not from the parties from whom it was claimed to have been made and instead may have been purchased from grey market without proper billing or documentation. The High Court held that in the present case when the total sale is accepted by the Assessing Officer, he could not have questioned the very basis of the purchases. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. 5.9. I, therefore, find that in the case of the appellant as well, the ratio of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of 12.5% profit as having been embedded in the bogus purchase transaction was held to be a fair and just outcome. Some of these decisions are quoted below:- a) Meru Impex Ex in ITA No.2660/Mum./2017. b) MP Recycling Co. in ITA No.6358/Mum./2016. c) Y.A.Mamaji Furnishing Co. in ITA's 4756,4757 4758/Mum./2014 d) Manish M Shah in ITA 2975/ Mum./2015. 5.12. In view of the above detailed discussion, I restrict the addition on account of bogus purchase to 12.5% of ₹ 7,47,697/-, thus, indicating that the addition confirmed shall be ₹ 93,462/-. The remaining addition of ₹ 6,54,235/- is deleted. The impugned issue is accordingly decided and the appeal is partly allowed. 7. On a careful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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