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TMI Blog2017 (9) TMI 1935X X X X Extracts X X X X X X X X Extracts X X X X ..... ly profit element embedded in such purchases can be added to income of the assessee. We uphold the decision of the Ld. CIT(A) and in the interest of justice, restrict the addition to 10% of the total amount of bogus purchases made by the assessee during the year relevant to the assessment year under consideration. We accordingly dismiss all the grounds of the appeal of the revenue and direct the AO to compute the addition in terms of this order. - ITA No. 2504/MUM/2017 - - - Dated:- 29-9-2017 - SHRI B.R. BASKARAN AND SHRI RAM LAL NEGI, JJ. Appellant by : Shri T.A. Khan (Sr. DR)) Respondent by : Shri Mehul Shah (AR) ORDER RAM LAL NEGI, J. This appeal has been preferred by the revenue against order dated 10/01/2017 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing scrutiny assessment as the submission in response to notice under section 142 (1) of the Act. 4. In order to verify the genuineness of the transactions, information was sought under section 133 (6) from the concerned parties, however the notices were return back un-served. The assessee also failed to produce the parties before the AO. Accordingly, the AO issued show cause notice to the assessee as to why the purchases so made during the relevant period should not be treated as bogus. In response thereof the assessee filed written reply and submitted that the goods purchased from the said parties were sold to different customers. All payments to the parties were made through account payee cheques. Since, the entire details have been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s before the AO and before CIT (A). (ii) The affidavits filed by the entry providers before Sales Tax Authorities cannot be ignored having evidentiary value. 4. The order of the CIT (A) may be vacated and that of the Assessing Officer may be restored. 6. Before us, the Ld. departmental representative (DR) relying on the assessment order passed by the AO submitted that the Ld. CIT(A) has erred in restricting the addition to 10% of the bogus purchases. The Ld. DR further submitted that action of the Ld. CIT(A) is not in accordance with the principles of law laid down by the Hon ble Supreme Court, the High Courts and the various Benches of the Income Tax Tribunal. Since, the assessee has failed to produce Octroi receipts, Delivery c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Components Pvt. Ltd., Nashik Vs. ACIT Circle-2, Nashik, ITA No. 695/PN/2016. In this cases the above appellants have filed appeals against the orders of the undersigned, wherein the benefit on account of purchases in gray market was estimated at 10% and accordingly addition on account of hawala purchases was confirmed to the extent of 10% of the impugned hawala purchases. The Hon ble ITAT had held in concluding para 13 of the order, while deciding the case of M/s Chetan Enterprises as under:- In paras hereinabove, the addition to the extent of 10% the quantum of hawala purchases has been added in the hands of assessee and the said addition would meet the ends of justice, as the purchases are admittedly made from hawala parties. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als . From the above decisions of Hon ble ITAT, Pune, it is evident that the Hon ble ITAT has held that where the statements recorded by Sales Tax department in support of the impugned hawala purchases is available on the record of the A.O, then the addition is to be restricted to 10% of the hawala purchases and where the above mentioned statements are not available on the record of the A.O., then the addition is to be fully deleted. Therefore, respectfully following the above mentioned decision of Hon ble ITAT, Pune, the A.O. is directed, in the case under appeal, to delete the total addition on account of hawala purchases if the statements recorded by Sales tax department in support of the impugned hawala purchases is not avail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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