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TMI Blog2017 (6) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in upholding action of the Assessing Officer in disallowing purchases of Rs.9,21,532 by alleging the same as bogus / hawala in nature without bringing any evidence or other material on record to support the allegation. 2 On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in not appreciating the fact that what could at the best be taxed was difference in applicable gross profit made on the purchases made that were ultimately sold, and npt the entire purchase as the relevant income by way of sales was already accounted for by the Appellant; and there cannot be sale without corresponding purchases.'" 2. Brief facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the evidence on record the abount the consumption and the sale of material. The AO not disputed the sale and consumption on material. The assessee furnished all possible detail and information which was required from the assessee. The assessee was not given any opportunity of cross-examination of concern parties. Mere on the basis of information collected by VAT department, the purchase of the assessee cannot be treated as bogus. The CIT(A) also confirmed the addition without appreciating the fact of the assessee' case. The assessee during the appellate stage furnished the comparison of Gross Profit (GP) ration showing that there was no variation from last three AY and in subsequent year. The assessee explained before the AO as well as be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department. All the parties are in existence and their addresses are mentioned on the invoices. The assessee further contended that transaction can be verified with the banks through which payments were made. The assessee demanded the cross examination of those parties. The contention of the assessee was not accepted by the AO holding that the investigation authorities i.e. Income Tax and Sales Tax Authorities had confirmed that these parties had given accommodation/ bogus bills to the assessee and disallowed the aggregate purchase from three parties namely Sidhivinayak Steels, Shubham Enterprises, Sagar Enterprises. The learned CIT(A) while considering the contention of assessee observed that the assessee failed to produce the stock regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged by the Maharashtra Government. As a matter of fact, the VAT department is charged from 4% to 12.5% by the Govt. of Maharashtra on various purchases. Considering the totality of the fact and in order to fulfil the gap of Revenue leakage, the disallowance of reasonable percentage will meet the end of justice in the present case. Thus, considering the peculiarity of the present case, we deemed it appropriate to reduce the disallowance @ 10% of impugned purchases (10% of Rs. 9,21,532/-). The Hon'ble Bombay High Court in the case of CIT vs Shri Hariram Bhambhani (Bom) in ITA No. 313 of 2013 decided on 04-02-2015 also held that Revenue is not entitled to brought the entire disputed sale consideration, but the only profit attributable on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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