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TMI Blog2022 (7) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... as reasonable estimation of profit element embedded in the bogus purchases. Thus in the light of the gross profit in the iron and steel business gross profit @ 10%, which is agreed by both the parties to the appeal, is ordered to be added on the bogus purchases - AO is directed to charge the assessee at the gross profit of 10% on the bogus purchases. - ITA No. 237/M/2022 - - - Dated:- 12-7-2022 - SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER Assessee by : Shri Jitendra Singh, A.R. Revenue by : Shri Ashish Kumar, D.R. ORDER Per Kuldip Singh, Judicial Member: The appellant, Shri Abbasbhai Fidahusein Bhartoo (hereinafter referred to as the assessee ) by filing the present appeal, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in making addition of Rs.7,91,289/- under section 69C of the Act merely on the basis of certain investigation carried out by the Sales Tax Department without providing the Appellant an opportunity to cross examine the department's witnesses. Thus, the addition of Rs.7,91,289/- is not at all justified and the same may be deleted. 5. The appellant denies any liability to pay interest under section 234B and 234C of the Act. Therefore, the same are not leviable. 2. Briefly stated facts necessary for adjudication of the controversy at hand are : assessee is engaged into the business of iron and steel. On the basis of information received from the Sales Tax Department through Director General of Income Tax (DGIT) (Investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is also not in dispute that during the assessment proceedings the assessee was called upon to prove the genuineness of the purchases by producing the parties. Both the AO as well as the Ld. CIT(A) have proceeded to make the addition qua alleged bogus purchases on the basis of estimation without bringing on record any evidence to substantiate these allegations. 6. In the backdrop of the aforesaid undisputed facts the Ld. A.R. for the assessee challenging the impugned order contended that addition in this case at the rate of 25% of the alleged bogus purchases has been made on the basis of estimation which is not sustainable because sales in this case has not been disputed by the Revenue Authority; that in the iron and steel business b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases. The AO has observed 100% of the purchase value to be added to the income of Assessee, the CIT(A) has said it should be 15% and ITAT has said it should be 10%. First of all, this would be an issue which requires evidence to be led to determine what would be the actual profit margin in the business that Assessee was carrying on and the matter of calculations by the concerned authority. According to the Tribunal, in all such similar cases, it is ranged between 5% to 12.5% as reasonable estimation of profit element embedded in the bogus purchase when material consumption factor do not show abnormal deviation. 5. Whether the purchases were bogus or whether the parties from whom such purchases were allegedly made were bogus was es ..... X X X X Extracts X X X X X X X X Extracts X X X X
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