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TMI Blog2016 (11) TMI 1716X X X X Extracts X X X X X X X X Extracts X X X X ..... nt - HELD THAT:- The Tribunal, in all such cases, has invariably taken a stand that when GP/NP rates are comparable and sales figures are not disputed by the revenue then entire purchases do not deserve disallowance rather some ad hoc disallowance ranging from 5% to 12.5% has been found to be a reasonable estimation of profit element embedded in the bogus purchases particularly when material consumption factor do not show abnormal deviations. We also observe that CIT(A) has enhanced the amount of bogus purchases with respect to three more parties aggregating to Rs.1,58,00,987/- without confronting the same to the assessee. We direct that assessee shall suffer disallowance with respect to bogus purchases to the extent of 10% of Rs.2,47, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anti/corrosive/protective coating applicators, who filed its return of income for impugned AY declaring total income of Rs.1,97,39,943/- which was processed u/s 143(1) of the Income Tax Act, 1961 [the Act]. The assessee s case was sought to be reopened by the Assessing Officer [AO] u/s 148 of the Act on the basis of information received from the Investigation Wing of the Income Tax Department that the assessee had obtained bogus purchase bills from 14 parties totaling Rs.2,47,15,690/- which were stated to be hawala operators. The assessee contended that he was engaged in extensive projects and in need of huge quantity of materials to speed up the work of the projects towards completion which made the assessee to make purchases from dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enhanced the amount of bogus purchases to the following extent:- No. Name of the Party Amount of Purchases (Rs.) 1. Ramex Trade Impex Pvt. Ltd. 69,90,308/- 2. Hermitage Trading Co. Pvt. Ltd. 53,76,208/- 3. Urvin General Trading Pvt. Ltd. 34,34,471/- Total 1,58,00,987/- CIT(A) further noted that AO did not made independent investigation to ascertain the true nature of purchases and existence of suppliers by issuing notices u/s 133(6) or Section 131. The w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute. The only grievance is with respect to extent of ad hoc disallowance to be sustained with respect to bogus purchases. The Tribunal, in all such cases, has invariably taken a stand that when GP/NP rates are comparable and sales figures are not disputed by the revenue then entire purchases do not deserve disallowance rather some ad hoc disallowance ranging from 5% to 12.5% has been found to be a reasonable estimation of profit element embedded in the bogus purchases particularly when material consumption factor do not show abnormal deviations. We also observe that CIT(A) has enhanced the amount of bogus purchases with respect to three more parties aggregating to Rs.1,58,00,987/- without confronting the same to the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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