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TMI Blog2023 (2) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... fore them, who was a trader, was to be worked out by bringing the G.P. rate of such bogus purchases at the same rate as that of other genuine purchases - we are of the considered view that on the same lines the profit made by the assessee in the case before us by procuring the goods at a discounted value from the open/grey market can safely be determined by bringing the G.P rate of such bogus purchases at the same rate as that of the other genuine purchases. Thus, in terms of our aforesaid observations restore the matter to the file of the A.O, with a direction to him to restrict the addition in the hands of the assessee qua the impugned bogus/unverified purchases by bringing the GP rate of such bogus purchases at the same rate as that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the ld. CIT(A) has erred in sustaining the addition of Rs.1,00,000 is disallowing out of total expenses of custom milling charges. 4. The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before or at the time of hearing. On the other hand the revenue is aggrieved with the impugned order on the following grounds of appeal: 1. Whether on the facts and in circumstances of the case the CIT(A) was justified in allowing substantial relief of Rs. 1,79,00,893/ -by estimating the profit element enjoyed by the assessee on account of bogus purchases of Rs.7,96,42,050/- @ 2.90% as against 25% despite upholding the findings of bogus purchases 2. Whether on the facts of the case and in law, the CIT(A) was j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Shri Krishna Processors, Raipur 2,29,21,500/- 3. M/s. Shri Samleshwari Foods, Abhanpur 73,28,750/- 4. M/s. Sanjeevni Agro Products, Raipur 1,24,60,000/- 5. M/s. Shubh Laxmi Traders, Raipur 10,55,000/- 6. M/s. Shri Tulsi Agro, Raipur 1,17,71,250/- 7,96,42,050/- As the assessee had failed to substantiate the authenticity of the aforesaid purchase transactions on the basis of clinching documentary evidence to the satisfaction of the A.O, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asing the goods in question at a discounted value from the open/grey market. 10. Admittedly, it is a matter of fact borne from records that the assessee had failed to substantiate the authenticity of its claim of having purchased the goods in question, viz. rice/broken rice/bran from the aforementioned six parties. In fact, the assessee had not assailed the dubbing of the impugned purchases in question as bogus/unsubstantiated purchases by the lower authorities. The only grievance of the assessee before us is that the CIT(Appeals) had exorbitantly sustained the addition @2.90% of the value of the impugned purchases. On the other hand, the revenue is aggrieved with the scaling down of the disallowance of 25% of the value of the impugned p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid facts, we are of the view that the addition in the hands of the assessee is liable to be restricted only to the extent of the profit which the assessee would have made by procuring the goods at a discounted value from the open/grey market, as against the inflated value at which the same had been booked on the basis of the bogus bills in its books of account. In so far the issue of quantification of profit which the assessee would have made by procuring the goods in question from the open/grey market, we find that the Hon ble High Court of Bombay in the case of Pr. Commissioner of Income Tax-17 Vs. M/s. Mohhomad Haji Adam Company, ITA No1004 of 2016, dated 11.02.2019, while upholding the order of the Tribunal, had observed, that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact in paragraph 8 of the same Judgment the Court held and observed as under- So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66% Therefore, considering 5.66 % of Rs.3,70,78,125/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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