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TMI Blog2022 (3) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases. Even before the learned CIT A assessee agreed four addition to the extent of 5% of bogus purchases. There is no justification for retaining profit at the rate of 2% of such bogus purchases as addition. Therefore, we also reject the arguments of the assessee of restricting the profit only to 2 percentage. X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional disallowance @ 12.50% over and above the profit disclosed by the appellant is unfair;" 04. Brief facts of the case show that assessee is a partnership firm engaged in the business of washing and processors of garments and manufacturing of the garments. It filed its return of income at ₹ 29,14,879/- which was assessed under section 143(3) of the Income tax Act [ the Act] on 17.11.2011 at ₹ 31,08,370/-. Thereafter information was received that assessee is one of the beneficiary of accommodation bills in the form of bogus purchases and therefore the notice under section 148 of the Act was issued to the assessee on 26.02.2013. 05. During the course of reassessment proceedings the Assessing Officer found that because of investigation carried out by the sales tax department, it was found that assessee has purchased of ₹ 40,06,166/- from M/s Saileela Trading Pvt. Ltd. and ₹ 2295/- from M/s Nisha Enterprises. The assessee could not provide the address of Nisha Enterprises. With respect to Saileela Trading Pvt. Ltd., notices were issued under section 133(6) of the Act but no response was received. Therefore, assessee was asked to produce the above party. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not enough to treat the purchases as bogus. He relied on several judicial precedents for this proposition. He further referred to 13 different judicial precedence and submitted that on identical facts, the profits have been estimated from 0.2 % to 8.5% and therefore, the addition more than 2% cannot be justified. 010. We have carefully considered the rival contentions and perused the orders of the lower authorities. The fact shows that assessee is a partnership firm engaged in the business of government washing processing and stitching. The information was received from the DGIT (investigation) that the assessee has taken certain accommodation entries to inflate its purchases. Therefore the enquiry was conducted by issue of notice u/s 133 (6) of the act wherein it was found that many of such parties are not available at the address given and notices have returned. Therefore, these parties were not traceable. Assessee was asked to produce them along with the details of purchase of goods including transportation, delivery challans and stock registers etc. The assessee did not maintain stock register and quantitative details have also not been produced therefore the case of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted before the AO have not been considered even though the appellant filed document evidences and the additions made purely based on assumptions and surmise. The AR of the appellant depended that there is no evidence or material on record to justify that appellant had made any bogus purchases. The purchases had been made through the brokers who supplied the goods at premises of the appellant who received the goods and sold by the appellant at the profit margin of more than 15% on sales. The AR of the appellant also mentioned that the AO has not rejected the appellant's books of accounts u/s 145 (3) and having accepted the book results, the AO is not justified in making the usual disallowance of purchases of ₹ 8,675,913/-. The AO simply relied on since tax authorities information regarding the list of 1555 parties as hawala who had not paid their VAT tax liability to the government due to which the input setup ( ITC) u/s 48 (5) of the ambit act 2000 to would be disallowed. The this third- party statement cannot be used against the appellant, a copy of such statement was also not provided to the appellant for confrontation and for cross examination to the appellant, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts, permanent account number of the suppliers, bank statements evidencing the payments made to the four parties to justify the genuineness of the recorded purchases. From this, it is apparent that assessee has shown that bogus purchases have also gone into the sales of the goods as it has produced corresponding sales bills. This fact has not been challenged by the revenue. As the bogus purchases shown by the assessee have also been reflected in the corresponding sales, we do not find any infirmity in the order of the learned CIT - A in upholding the addition of bogus purchases only to the extent of 12.5% of such purchases. 012. The judicial precedent relied upon by the learned departmental representative are on distinguishable facts. In case of Arun Malhotra [[2014] 47 taxmann.com 385 (Delhi) the matter was remanded to the ITAT for deciding the issue afresh and with reasons and after looking at the evidences. In case of CIT V La Medica 2001] 117 Taxman 628 (Delhi)/ [2001] 250 ITR 575 (Delhi) it was always the claim of the assessee that purchases are not bogus. Here there is no issue on that aspect but about determination of profit only. Further in case of N K proteins Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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