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TMI Blog2023 (7) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of purchase from bogus entities/parties. That view has been upheld by the Tribunal in principal while dismissing the appeal of the Revenue. Calculation of gross profit ratio and addition in the gross profit ratio - We find that the Tribunal has not addressed the issue of adopting the gross profit rate of 5% on the alleged Hawala purchase of Rs.2.45 crores as against the rate of 0.69% declared by the assessee, despite the fact that the CIT (A) had specifically gone into that question and had directed the AO to make 5% addition in the gross profit ratio, while deleting the balance addition. We, therefore, deem it appropriate to remand the matter back to the Tribunal only to the limited extent of going into that issue. - K.R. SHRIRAM AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of bogus purchase ignoring the fact that the addition was made by the A.O. on the basis of credible information from the Sales Tax Department and on the fact that the assessee did not substantiate/confirm the veracity of the impugned purchases in the assessment proceedings? b. Whether in the facts and circumstances of the case, the ITAT was justified in directing the A.O. to delete the addition made on account of bogus purchase ignoring the fact that the absolute burden of proof to substantiate/confirm the veracity of the impugned purchases was cast on the assessee, which was not discharged by cogent, relevant and reliable evidence, during the course of the assessment proceedings? c. Whether in the facts and circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the order of assessment under Section 143(3) r/w Section 147 of the Act was passed on 30th March, 2015 and total income assessed at Rs.1,46,82,548/-. The A.O. thus made an addition of Rs.1,42,34,578/- on account of alleged bogus purchases from Hawala dealers/parties. 5. An appeal was preferred by the assessee before the CIT (Appeals). The appeal was allowed inter alia on the ground that the A.O. having not disputed the sales, it was not a case of bogus purchases and that it was at best a case of inflated purchases. The CIT (Appeals), however, was of the opinion that the gross profit shown by the assessee at 0.69% was very low in that particular kind of trade and, therefore, estimated the gross profit at 5% and further directed the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal of the assessee on the ground that the A.O. had not disputed the sales and, therefore, this was not a case of bogus purchases, inasmuch as if the purchase was bogus, it would not be possible for assessee to complete the transaction by way of sale, unless it could be shown from the record that the corresponding sale was also a sham transaction. We are in agreement with the view expressed by the CIT (Appeals) that, if the purchases are bogus, it would be impossible for the assessee to complete the business transaction and that if the purchase is bogus, the corresponding sale also must be bogus or else the transaction would be impossible to complete and as a necessary corollary, unless the corresponding sale is held to be bogus, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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