9911796707
TMI Blog2024 (6) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... rage GP of 3.49 and sales tax on coal is 4%, then there cannot be huge application of GP also. Accordingly, we apply GP rate of 8% on the purchases is reasonable as suppression of profit in a wholesale of coal cannot be 12% or more and since assessee has already disclosed GP rate of 3.27% accordingly, balance GP @ 4.73% on such alleged purchases is to made. The application of reasonable GP rate on such kind of bogus purchases has been upheld by the Hon ble Bombay High Court in the case of PCIT vs. Max Flex and Imaging Systems Ltd [ 2024 (5) TMI 1446 - BOMBAY HIGH COURT] wherein held that where ld. AO is not disputed the sales made by the assessee then out of purchases only profit element in alleged bogus purchases amount can be treated as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation, assessee is also one of the beneficiary of bogus purchase bills of Rs. 3,71,19,489/-. Based on this information assessee s case was reopened u/s. 147 and accordingly, notice u/s. 148 was issued on 28/03/2018. During the course of re-assessment proceedings, ld. AO on perusal of the purchase register submitted by the assessee noted that assessee had made purchases from following entities. i) M/s Astavinayak Enterprises ii) M/s Shri Balaji Associates iii) Ashtaganga Enterprises iv) M/s Great Town Trading Pvt. Ltd. 4. In response to the notice assessee submitted sample copies of the bills from the said parties and he noted that three of the parties were under question by the Sales Tax department and all these parties belong to Nagpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, then gross profit would be around 60% and net profit would come to Rs. 7,70,66,452/- on total purchases debited in the profit and loss account at Rs. 13,27,74,037/-. He further submitted that the average gross profit earned for four years was 3.49% and during the year it was 3.27%. He further submitted that the entire purchases had been recorded in the books of accounts and the purchases have been made through account payee cheques. Assessee has also recorded the details of stock even though regular stock register is not maintained. Once the quantity of opening stock, purchases, corresponding sales and closing stock has not been disturbed, then entire purchases cannot be added and in support of the same he relied upon the decision of var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be disallowance of entire purchases as it will lead to absurd result of gross profit rate of 60% which in case of a wholesale dealer of coal is not possible nor has it been brought on record any information that in such a trade huge GP of 60% can be earned. At the most, it can be a case that assessee might have taken accommodation purchases bill from the parties and it must have purchased some quantity of coal from the grey market only to suppress the profit. One very important fact is that under the sales tax return, the purchases have been accepted and no discrepancy has been found on the quantity of purchases. If in the earlier years on similar turn over the GP rate has been ranging from 3.27 to 4.52 with an average GP of 3.49 and s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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