ASHOK ELECTRICALS,MUMBAI vs. INCOME TAX OFFICER 18(3)(2), MUMBAI

Facts in all the four appeals are same, wherein addition has been made by the AO by estimating extra profit at 12.5% of bogus purchases. By the impugned orders the CIT(A) confirmed the action of AO. Assessee is in further appeal before us.

Rival contentions have been heard and record perused.

Facts in brief are that assessee is a dealer in electrical goods. In the case of Ashok Electricals, during the course of assessment for A.Y.2010-11, AO made addition of Rs.15,175/- being 12.5% of purchases of Rs.1,21,406/- from the so called hawala dealers, however, AO has not rejected books of accounts. It was also argued by learned AR that no opportunity of cross examination was given by the AO in respect of the dealers on whose statement AO has relied. It was also submitted that copies of statement / documents on which AO has relied upon were also not given to the assessee. From the record, we found that on the basis of information from Sales Tax and DGIT(Inv.), AO found that assessee has not purchased goods from the parties as recorded in its books of accounts, therefore, estimated extra profit of 12.5% on such purchases. We found that before the CIT(A) assessee has filed purchase bills in respect of purchases made from so called parties vide letter dated 09/09/2015 and corresponding sales bills to whom sales were made for the goods purchased from the so called hawala dealers vide letter dated 15/12/2015 alongwith itemwise break up of sales and purchases. Keeping in view totality of facts and circumstances of the case, vis-à-vis nature of assessee’s business, we modify the order of lower authorities and restrict the addition to the extent of 10% of bogus purchases in all the above cases.

In the result, appeals are allowed in part in terms indicated hereinabove.