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TMI Blog2017 (11) TMI 1906X X X X Extracts X X X X X X X X Extracts X X X X ..... e by account payee cheque which are duly reflected in the bank statement of the assessee. There is no evidence to show that the assessee has received cash back from the suppliers. AO has not brought any material on record to show that there is suppression of sales. It is basic rule of accountancy as well as of taxation laws that profit from business cannot be ascertained without deducting cost of purchase from sales. After giving these observations, CIT(A) has directed AO to estimate profit at 12.5%. Assessee has already declared GP of 6.40% on the total sales. The GP declared by the assessee with respect to the alleged bogus purchases were better than the GP declared in respect of remaining sales. Therefore we modify both the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) VAT Audit Report showing all purchases-sales with their TIN Number. 4. Being not satisfied by assessee's submission, AO added back entire purchases in assessee's income. 5. By the impugned order CIT(A) found that suppliers were bogus but purchases were genuine, accordingly profit element to the extent of 12.5% was estimated on the same. Thus, addition was restricted to 12.5% of the purchases. 6. It was argued by learned AR that AO has not conducted any enquiry on his behalf, to prove the above purchases made from concerns to be non-genuine. He has merely relied on borrowed information and statements given by DIT(Inv.), Mumbai. Whereas, the jurisdictional condition precedent to reopen or reassess the case is to have a Fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% addition with respect to such purchases. 10. We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that assessee is engaged in trading of ferrous and non-ferrous metals. On the basis of information from Sales Tax Department, AO made addition with respect to the alleged bogus purchase. By the impugned order, CIT(A) observed that where purchases are held as bogus then the corresponding sales should also be held bogus as without the material being purchased sales is not possible, therefore, without corresponding production / sales being held bogus, it cannot be the case of bogus purchases. After observing at para 5.6, CIT(A) found that it is a case of purchases from bogu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are duly reflected in the bank statement of the assessee. There is no evidence to show that the assessee has received cash back from the suppliers. The AO has not brought any material on record to show that there is suppression of sales. It is basic rule of accountancy as well as of taxation laws that profit from business cannot be ascertained without deducting cost of purchase from sales. After giving these observations, CIT(A) has directed AO to estimate profit at 12.5%. 10. From the record we found that assessee has already declared GP of 6.40% on the total sales. The GP declared by the assessee with respect to the alleged bogus purchases were better than the GP declared in respect of remaining sales. Therefore, considering totali ..... X X X X Extracts X X X X X X X X Extracts X X X X
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