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TMI Blog2021 (3) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Act'). For the sake of convenience, as common issues are involved, we are proceeding to dispose off these appeals by a consolidated order. Facts being identical, we begin with the AY 2009-10. 2. The ground of appeal filed by the assessee reads as under: "That the Id. C.I.T (Appeals) has erred in confirming the ad-hoc disallowance made by the A.O. at Rs. 15,51,341/- being 12.5% of trading purchases of Rs. 1,24,10,733/- from the alleged hawala parties, treating the same as non-genuine merely on the basis of information received from Sales Tax Department of Government of Maharashtra without bringing any contrary evidence on record or doing any own worthwhile independent investigation and also without properly appreciating the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above facts, the AO estimated the profit @ 12.5% of the disputed purchases of Rs. 1,24,10,733/- and accordingly brought to tax Rs. 15,51,341/-. 4. In appeal, the Ld. CIT(A) vide order dated 27.05.2019 confirmed the above addition made by the AO by observing that : "8.4.8. From the facts available on records, it is observed that in the present case also the AO has neither disbelieved the purchases nor the corresponding sales/works made. The AO has held that the impugned purchases were not made from above referred dealers/parties but from somewhere else/open market. The facts and circumstances of the present case are similar to that of facts adjudicated by the Hon'ble Gujarat High Court and Hon'ble ITAT, Mumbai in above referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions u/s 133A of the Act, bogus/hawala/suspicious parties concerned therein in their statement had admitted that they are engaged in issuing bogus/hawala bills, but subsequently, all the three parties concerned therein had filed affidavits stating that as far as assessee is concerned they had actually made sales ; whereas in the present case, the AO in the assessment order has given a factual finding that in order to verify the genuineness of the transaction, notices u/s 133(6) were issued to the said parties at the address provided by the assessee, however, said notices could not be served and returned back un-served by the postal authorities with the remarks "left", "not traceable" "not known" etc. and (iii) in that case, the Bombay High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese circumstances the AO was not correct in adding the entire amount of purchases as the assessee's income. He, therefore, deleted the addition refreshing it to 10% of the purchase amount. He also directed the AO to make addition to the extent of difference between the gross profit rate as per the books of accounts on undisputed purchases and gross profit on sales relating to the purchases made from the said three parties. The assessee carried the matter before the Tribunal. The Revenue also carried the issue before the Tribunal. The Tribunal allowed the appeal of the assessee partly and dismissed that of the Revenue. The Tribunal noted that the CIT(A) had not given any reasons for retaining 10% of the purchases by way of ad-hoc additions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- " So far as the question regarding addition of Rs. 3,70,78,125/- as gross profit on sales of Rs. 37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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