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TMI Blog2020 (12) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... .5% of the total amount of bogus purchases sustained by the ITAT holding that only profit element embedded in such purchases could be added to the income of the assessee. Since, the Ld. CIT (A) has restricted the addition to 12.5% no reason to interfere with the findings of the Ld. CIT (A). Moreover, the facts of the case relied upon by the Ld. DR are different from the facts of the present case. Hence, in our considered view, the addition of 12.5% sustained by the Ld. CIT(A) is reasonable to meet the ends of justice. - Decided against revenue. - ITA No. 3557/MUM/2019 - - - Dated:- 29-10-2020 - Shri Shamim Yahya (AM) And Shri Ram Lal Negi (JM) For the Assessee : Shri Anish Shah (AR) For the Revenue : Shri Jitendra Kumar (DR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in directing the A.O. to restrict the addition of bogus purchases to 12.5% as against 25% addition made by the Assessing Officer on account bogus purchases without appreciating the facts that parties from whom these purchases were made proved accommodation entry providers, as concluded by Sales Tax Authorities pursuant to the investigation carried out by them? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in not considering the latest Apex Court decision in the case of N.K Proteins Ltd. vs. DCIT (769 of 2017), wherein the Hon‟ble Supreme Court has confirmed 100% addition made on account of bogus purchases? 4. The Ld. Departmental Representative (DR) submitted before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord including the cases relied upon by the parties and the authorities below. As pointed out by the Ld. counsel, the Ld. CIT (A) has restricted the addition to 12.5% of the alleged bogus purchases by following the ratio laid down by the Hon ble Gujarat High Court in the case of CIT vs. Simit P. Sheth (supra). The concluding paras of the Ld. CIT (A) read as under:- 7. Grounds No. 2 3 if the appeal are against addition being 25% of the purchases of ₹ 14,99,063/-. As per the investigations carried out by the Sales Tax Authorities the aforementioned parties were found to be involved in giving accommodation entries only without actually supplying the goods. The logical inference is that the purchases made by the appellant would a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales which has not been doubted by the Assessing Officer. Since there can be no sales without corresponding purchases, the only logical explanation is that the appellant would have made purchases from undisclosed parties in the grey market at lower rates and purchases were shown as being made from the impugned parties to suppress its profits.. In such a situation, the various Courts including the Hon‟ble Gujarat High Court in the case of CIT vs Simit P. Sheth, 356 ITR 451 have held that not the entire purchases but only the profit element embedded in these purchases was to be disallowed. The Hon‟ble Gujarat High Court in this case has held that profit margin of 12.5% of the bogus purchases will be reasonable. Respectfully follow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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