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TMI Blog2019 (7) TMI 2045X X X X Extracts X X X X X X X X Extracts X X X X ..... on merits in estimating the profit element from alleged bogus purchases @3%. For the A.Y. 2013-14 the assessee challenged the order of the Ld. CIT(A) in estimating the profit element at 3% on alleged bogus purchases. 3. In so far as the Ground relating to challenging the validity of reassessment order, the Ld. Counsel for the assessee submits that Ground Nos. 1 & 2 of the grounds of appeal are not pressed. In view of the submissions of the Ld. Counsel for the assessee Ground Nos. 1 &2 relating to reopening of assessment are dismissed as not pressed. 4. Coming to the merits of the case briefly stated, the facts are that, the assessments for the A.Ys. 2008-09 and 2009-10 were reopened consequent to the information received from DGIT (Inv.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT Instruction No. 2/08 dated 22.02.2008 and the decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth [356 ITR 451] he restricted the profit element from such purchases at 3% as against 5% estimated by the Assessing Officer. 6. Before me, the Ld. Counsel for the assessee reiterated the submissions made before the lower authorities. He also submitted that the dealers have confirmed the sales made to the assessee. The Ld. Counsel for the assessee further submits that assessee has already declared overall Gross Profit at 6.52%, 7.08% and 8.09% for the A.Ys. 2008-09, 2009-10 and 2013-14 respectively. Learned Counsel for the assessee submitted that when the assessee has already declared higher profits there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us purchases shown to have been made through hawala transactions from certain parties who were only providing accommodation sale bills? (b) Whether on the facts and in the circumstances of the case and in law, where evidently no purchases were made from these parties who were issuing only bogus accommodation bills and this finding has been accepted by the CIT(A) and the ITAT, the ITAT, without any evidence, was justified in presuming that there must have been purchases and thereupon giving huge relief to the assessee? (c) Whether on the facts and in the circumstances of the case and in law, the order of the Hon'ble ITAT is perverse as no reasonable person acting judicially and properly instructed in the relevant law could arrive at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, deleted the addition refreshing it to 10 % of the purchase amount. He also directed the A.O. to make addition to the extent of difference between the gross profit rate as per the books of accounts on undisputed purchases and gross profit on sales relating to the purchases made from the said three parties. 4 The assessee carried the matter before the Tribunal. The Revenue also carried the issue before the Tribunal. The Tribunal in the impugned Judgment allowed the appeal of the assessee partly and dismissed that of the Revenue. The Tribunal noted that the CIT(A) had not given any reasons for retaining 10 % of the purchases by way of ad hoc additions. The Tribunal, therefore, deleted such additions, but retained the portion of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fictitious invoices have been debited in the trading account since the transaction has been found to be bogus. The Tribunal having once come to a categorical finding that the amount of Rs. 2,92,93,288/- represented alleged purchases from bogus suppliers it was not incumbent on it to restrict the disallowance to only Rs. 73,23,322/" 6 Counsel pointed out that the S.L.P. against such decision was dismissed by the Supreme Court. 7 On the other hand, Ms Khan learned counsel for the assessee opposed the appeals contending that the Tribunal has given proper reasons. The assessee was a trader. Even if the purchases are found to be bogus, entire purchase amount cannot be added by way of assessee's income. 8 In the present case, as noted ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/- which comes to Rs. 20,98,621.88 we think it fit to direct the revenue to add Rs. 20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue." 9. In these circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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