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TMI Blog2021 (8) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of CIT v. Nikunj Eximp[ 2013 (1) TMI 88 - BOMBAY HIGH COURT] We agree with the view of the lower authorities that there should be an estimation of profit element from these purchases and should be estimated reasonably as the assessee could not conclusively prove that the purchases made are from the parties as claimed, especially in the absence of any confirmations from them - keeping in view the nature of business of the assessee i.e. trader in Ferrous and non-Ferrous Metals, it would be justified if the profit element embedded in those purchases are estimated at 4%. Accordingly, we direct the Assessing Officer to estimate the profit element from the non-genuine purchases at 4% for both the Assessment Years i.e., A.Y: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtation of any goods. In the reassessment proceedings, the assessee was required to prove the genuineness of the purchases made from various dealers as referred in Assessment Order. In response assessee furnished copies of ledger accounts along with copies of purchase invoices of the specified parties and bank statements and submitted that the purchases made are genuine. Assessee further submitted that the payments are made through account payee cheques as such contended that all the purchases are genuine. 3. Not convinced with the submissions of the assessee the Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there being any transportation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the profit element at 2%. Therefore, he requested that the same percentage may be adopted in its case. 5. Ld.DR vehemently supported the orders of the authorities below. 6. Heard both sides, perused the orders of the authorities below. It is not in dispute that sales have been accepted as genuine from out of these purchases. When the sales have been accepted as genuine the entire purchases cannot be treated as non-genuine. The Hon ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [355 ITR 290] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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