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TMI Blog2021 (4) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... uction. Information was received from the sales tax Department that assessee has made bogus purchases. The assessment was accordingly reopened. The assessing officer in this case has made 100% addition on account of bogus purchases as under :- A.Y. 2008-09 Rs. 2,88,45,497/- A.Y. 2010-11 Rs. 19,40,455/- 3. Upon assessees appeal Id CIT A reduced the same to 25% of bogus purchase following Hon'ble Gujarat High court decision in N.K. Proteins Ltd. (250 ITR 22). Learned CIT(A) has held as under :- "A perusal of the investigation report of the DDIT(Inv) 1(4) Mumbai shows that an Financial Investigation Unit- Suspicious Transaction Report (FIU-STR) was received in respect of one Shri Krishna Kumar Gupta. The investigation showed that Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the 10 parties were identified including Muni Trade P. Ltd and Yashobhumi Traders P. Ltd. from whom purchases of Rs. 4,93,70,825/- was claimed by the appellant over AY 2007-08, 2008-09 and AY 2010-11. Shri Shaikh admitted also that these 10 parties were also listed by the Maharashtra Sales Tax Authorities as Hawala dealers. Shri Shaikh was evasive in his replies in as much as he stated that material was actually purchased though the documentation was incomplete. He also stated that he was unable to comment on the statement of Shri Gupta. However, finally he did state that purchases of Rs. 11,20,777/- in FY 2006-07, Rs. 2,88,45,497/- in FY 2007-08 is offered as income in AY 2009- 10 when project was completed and Rsl,94,04,551/- in AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 (3,86,00,898) 6,32,12,585 3,21,82,195 (57,29,669) Disallowance 11,20,777 2,88,45,497 - 1,94,04,551 6.4. Perusal of details called also shows that in AY 2009-10, the audited accounts showed on money received as Rs. 4.86 crores against which expenditure as per seized documents was claimed as Rs. 4.87 crores. If the on-money is included in project sales, the profit disclosed on the project comes down to 25.6%. However, the disallowance made by the assessing officer results in net profit on project at 38.22%. This certainly is quite high and out of industry norms. This, in my view, suggests that the purchases are made, but from elsewhere. 6.5. Even if materials have been purchased, they are not purchased form these parties and may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of the partner of the assessee firm. We find that in this case the sales or any other aspect of assessee's workings have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from honourable jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dated 18.6.2014). In this case the honourable High Court has upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. However in that case all the supplies were to government agency. In the present case the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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