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TMI Blog2021 (8) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... conceded that the disallowance on bogus purchases may be restricted to 12.5% in line with the disallowance made in previous assessment years - we deem it appropriate to restrict the disallowance on account of bogus purchases @ 12.5%. The ground No.1 of the appeal is partly allowed in the terms aforesaid. Disallowance of business expenditure - AO has made adhoc disallowance of 30% to 40% in respect of various expenditure claimed by the assessee - disallowance of business expenditure was made by the Assessing Officer on the ground that no supporting evidences were filed by the assessee - CIT(A) restricted the disallowance to 20% - HELD THAT:- A perusal of the assessment order shows that the Assessing Officer has disallowed business expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i appearing on behalf of the assessee submitted that the assessee is a trader in hardware items, pipe fittings, iron and steel and electric goods. The assessment for assessment year 2009-10 was reopened on the ground that the assessee had obtained bogus purchase bills aggregating to ₹ 21,47,588/- from various dealers declared as hawala operators. Further, the Assessing Officer made adhoc disallowance of 30% to 40% of business expenditure, viz. accounting charges, audit fees, commission expenses, conveyance and travelling charges, freight and transportation, office rent, etc. The ld.Authorized Representative of the assessee submitted that the assessee had submitted all relevant documents in support of the expenditure claimed. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant documentary evidence substantiating expenditure claimed. Hence, the Assessing Officer made disallowance of 30% of such expenditure. The CIT(A) has reduced it to 20%, the order of CIT(A) is fair and reasonable. 4. Both sides heard, orders of authorities below examined. Undisputedly, the assessee has failed to substantiate genuineness of purchases made from alleged hawala operators. At the same time the sales turnover declared by the assessee has been accepted by the Assessing Officer. In such like transactions it is only the profit element embedded in such transactions that can be taxed, entire bogus purchases cannot be disallowed [Ref: PCIT vs. Paramshakti Distributors Pvt. Ltd., Income Tax Appeal No.413 of 2017 decided on 15th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained by the assessee. The CIT(A) has reduced disallowance to 20% again on estimations. We find no cogent reason to sustain disallowance in respect of business expenditure, accordingly, the same is directed to be deleted. The assessee succeeds on ground No.2 of the appeal. 6. In the result, appeal of the assessee is partly allowed. ITA No.7977/Mum/2019-A.Y.2010-11: 7. The ld.Authorized Representative of the assessee submitted that the solitary ground raised in the appeal is with respect to disallowance made on account of bogus purchases. The Assessing Officer made 100% disallowance of alleged bogus purchases. The CIT(A) confirmed the finding of Assessing Officer. The reasons for making disallowance in assessment year 2010-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that there is an error in the amount of bogus purchase mentioned in assessment order and impugned order. We find that in the assessment order the addition on account of bogus purchases has been made at ₹ 16,92,657/-. The contention of the assessee is that the addition has been made on account of bogus purchases from three dealers, wherein the aggregate of amount involved is ₹ 97,154/-. This error was pointed by the assessee before the CIT(A). The CIT(A) sought remand report from the Assessing Officer. However, the CIT(A) failed to consider the remand report. The relevant extract of remand report dated 14/08/2019 from the Assessing Officer is reproduced herein below: 5.2 Therefore, out of the total addition of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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