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TMI Blog2017 (10) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... ged bogus purchases. We are of the view that the issue needs to be reexamined by the AO in the light of the claim of the assessee that the purchases from Shree Ganesh Trading Co has been taken twice for the purpose of estimation of gross profit. If the claim of the assessee is found to be correct, then the AO is directed to exclude the name of Shree Ganesh Trading Co from the second list of entities considered for estimation of gross profit on alleged bogus purchases. Hence, we set aside the issue for the limited purpose of verification of purchases from Shree Ganesh Trading Co and direct the AO to consider the issue in the light of explanation of the assessee before estimating the gross profit on alleged bogus purchases. - I.T.A No.224 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO asked the assessee as to why the tax bills obtained from the entities listed on the website of Maharashtra Sales-tax Department should not be disallowed and added to the total income of the assessee. In response to notice, the assessee submitted that purchases from the parties listed on the website of Maharashtra Sales-tax Department are genuine purchases, which are supported by proper purchase bills and payment for such purchases has been made through proper banking channels. In order to verify the contention of the assessee, notice calling for information u/s 133(6) of the Act, was issued to the parties directing them to produce necessary evidences in support of purchases claims to have been made from them. The notice sent u/s 133(6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of business. Therefore, further addition of 30.12% would mean that the assessee has earned gross profit of 60.24% which is not at all tenable. The CIT(A), after considering the submissions of the assessee and also relying upon certain judicial precedents observed that the AO made additions only because the name of the parties appeared in the list of sales-tax department and the parties were not produced before the AO. Further, the AO himself contended that in the present case assessee has already disclosed gross profit of 30.12% which is much more than the profit estimated in the decisions relied upon by the AO. Therefore, looking into the entire facts of the case and relying upon the decisions relied upon, in his opinion, no addition was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments have been made through banking channels, which have not been disputed. The assessee has declared more than 30% gross profit for the relevant financial year which fact has been ignored by the AO, though the GP declared by the assesee is much higher than the gross profit in similar line of business. The Ld.AR further submitted that the AO has taken purchases from Ganesh Trading Co twice, even though the reasons recorded for reopening of the assessment shows one purchase from Ganesh Trading Co. Therefore, he requested to exclude Ganesh Trading Co from the second list of entities taken for estimation of gross profit. 7. We have heard both the parties and perused the materials available on record. The AO made additions towards gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the addition can be made only of the profit element embedded in such purchases. The Hon ble Gujarat High Court in the case of CIT vs Vijay Proteins Ltd has considered similar issue and after analyzing the issue of bogus purchases, has upheld estimation of gross profit at 12.5% on alleged bogus purchases. The Hon ble Gujarat High Court in the case of CIT vs Smit P Sheth has also considered a similar issue of bogus purchases and after considering the facts observed that no uniform yardstick can be applied for estimating gross profit on bogus purchases which is dependent upon the facts of different cases. The co-ordinate bench of ITAT, in a number of cases has taken a consistent view and directed the AO to estimate gross profit of 12.5% on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fact has been accepted by the Ld.CIT(A). Therefore, we are of the view that the issue needs to be reexamined by the AO in the light of the claim of the assessee that the purchases from Shree Ganesh Trading Co has been taken twice for the purpose of estimation of gross profit. If the claim of the assessee is found to be correct, then the AO is directed to exclude the name of Shree Ganesh Trading Co from the second list of entities considered for estimation of gross profit on alleged bogus purchases. Hence, we set aside the issue for the limited purpose of verification of purchases from Shree Ganesh Trading Co and direct the AO to consider the issue in the light of explanation of the assessee before estimating the gross profit on alleged bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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