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TMI Blog2023 (4) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... s of law. However, we note that, the different Hon ble Court in such facts and circumstances have adopted the basis of estimating the income based on some percentage. In the case on hand, the learned CIT(A) after referring to the judgment of Gurubachhan Singh J Juneja [ 2008 (2) TMI 177 - GUJARAT HIGH COURT] and CIT vs. Bholanath Poly Fab. Pvt. Ltd. [ 2013 (10) TMI 933 - GUJARAT HIGH COURT] estimated the profit embedded in alleged bogus purchases @ 10% of such purchases. The learned DR before us has not brought any contrary material against the finding of the learned CIT(A). Decided against revenue. - ITA No. 12/AHD/2020 - - - Dated:- 31-3-2023 - SHRI WASEEM AHMED , ACCOUNTANT MEMBER And Ms MADHUMITA ROY , JUDICIAL MEMBER For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure is required to be allowed and discussed a few case laws as under: - ITO vs. Sun Steel (2005) 92 TTJ (Ahmedabad) 1126 - ACIT vs. Karamchand Rubber Ind. Pvt. Ltd. ITA No. 6599/Delhi/2014 The AR tried to advance the argument as if no disallowance is called for even if the suppliers were not found at the listed premises. At this juncture, I disagree with the appellant that no disallowance is called for. There has been a doubt on the purchase expenditure and the onus has not been discharged fully jay the appellant, as a result. there is justification to go for disallowance of proportionate expenditure as per ratio laid down in following case laws : (a) CIT v. Motor General Finance Ltd. 254 ITR 449(Delhi) (b) CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made from bogus parties, nevertheless, the purchases themselves were not bogus. The Tribunal adverted to the facts and data on record and came to the conclusion that the entire quantity of opening stock, purchases and the quantity manufactured during the year under consideration were sold by the assessee. Therefore, the purchases of entire 102514 meters of cloth were sold during the year under consideration. The Tribunal, therefore, accepted the assessee's contention that the finished goods were purchased by the assessee, may be not from the parties shown in the accounts, but from other sources. In that view of the matter, the Tribunal was of the opinion that not the entire amount, but the profit margin embedded in such amount wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k account of assessee were considered as cash sales, entire sales could not be considered as income but only profit embedded in it be considered as income of assessee. .....Profit at 3.5 percent of total estimated turnover was held to be reasonable for a trader of farsan items. The range of disallowance is from 25% of bogus purchases to a mere Rs. 50,000/- or no disallowance at all, in the various case laws studied for this purpose. The quality of evidence such as ITR / PAN / Confirmation etc. brought on record during assessment proceedings itself and a very limited time of less than a week given to the appellant to produce the parties before AO, have strong bearing on the mind while deciding the disallowance in this case. In my opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases cannot be treated as income despite the fact that the assessee failed to discharge onus with respect to such purchases. Generally, the assessee adopts the practice for taking the bogus bills from the market when it makes purchases of the goods from the grey market in cash and without the bills which cannot be accounted in the books of accounts. Accordingly the assessee to bring such purchase of goods in accounting form, arranges the bogus bills from the market. Accordingly, the entire amount of bogus purchases shown by the assessee cannot be treated as income of the assessee. What best can be added in the given facts and circumstances is the profit embedded in such transaction of bogus purchases. To determine the profit embedded in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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