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TMI Blog2016 (6) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to 25% of the cost of such purchases in each year. Thus 25% of the payments made to the parties shall be disallowed on account of possible inflation of purchase price. In view of the above, the question raised in the present appeals is answered partly in favour of the assessee and partly in favour of the revenue. - TAX APPEAL NO. 1245 of 2006 TO TAX APPEAL NO. 1248 of 2006 - - - Dated:- 22-6-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR SN DIVATIA, ADVOCATE FOR THE OPPONENT : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order dated 03.03.2006 passed by the Income Tax Appellate Tribunal, Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale basis. The assessee firm had filed its return of income for assessment year 1993-94 declaring total income of ₹ 4500/- along with Tax Audit Report. During the course of assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases of varied amounts for various assessment years. The assessee furnished material in respect of the said purchases but the Assessing Officer rejected the same and made additions of various amounts as bogus purchases. 4. The assessee preferred appeals before the CIT(A). The CIT(A) partly allowed the appeals. On appeal before the ITAT, by the revenue, by the impugned order, ITAT reversed the finding of the CIT(A) and confirmed the entire addition made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Apex Court in the case of Commissioner of Income Tax vs. Simit P. Sheth reported in [2013] 38 taxmann.com 385 (Gujarat) wherein this Court has observed as under: 7. That being the position, not the entire purchase price but only profit element embedded in such purchases can be added to the income of the assessee. So much is clear by decision of this Court. In particular, Court has also taken a similar view in case of Commissioner of Income Tax-IV vs. Vijay M Mistry Construction Ltd. vide order dated 10.01.2011 passed in Tax Appeal No. 1090 of 2009 and in case of Commissioner of Income Tax-I vs. Bholanath Poly Fab Pvt. Ltd. vide order dated 23.10.2012 passed in Tax Appeal No. 63 of 2012. The view taken by the Tribunal in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal committed no error. Whether the purchases themselves were bogus or whether the parties from whom such purchases were allegedly made were bogus is essentially a question of fact . The Tribunal having examined the evidence on record came to the conclusion that the assessee did purchase the cloth and sell the finished goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. This was the view of this court in the case of Sanjay Oilcake Industries v. CIT [2009] 316 ITR 274 (Guj). Such decision is also followed by this court in a judgment dated August 16, 2011, in Tax Appeal No. 679 of 2010 in the case of CIT v. Kishor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there is no material to dislodge such finding. The issue is not whether the purchase price reflected in the books of account matches the purchase price stated to have been paid to other persons. The issue is whether the purchase price paid by the assessee is reflected as receipts by the recipients. The assessee has, by set of evidence available on record, made it possible for the recipients not being traceable for the purpose of inquiry as to whether the payments made by the assessee have been actually received by the apparent sellers. Hence, the estimate made by the two appellate authorities does not warrant interference. Even otherwise, whether the estimate should be at a particular sum or at a different sum, can never be an issue of la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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