TMI Blog2004 (6) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,147 (27,39,407 + 94,740). The GP calculation on this estimation of profit comes to 100.6 per cent. We find that such GP is not possible in such a trade of the assessee. On the basis of facts, at the most it, can be presumed that the assessee did not make purchases from parties but made from other unregistered dealer and got benefit of margin of purchases from unregistered dealer. We find that to that extent an estimation of profit can be made which will be fair and reasonable under the facts and circumstances of the case. Therefore, for the above purposes we estimate Rs. 50,000 and accordingly the order of the CIT(A) is modified and the addition to the extent of Rs. 50,000 is sustained and balance addition of Rs. 26,89,407 is deleted out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on whose name cheques are issued. On the basis of above facts the AO concluded that the cheques issued in favour of purchase parties were being encashed by the partners of the firm or their relatives. The AO has also examined the case in view of s. 40A(3) of the IT Act. After enquiry the AO noticed that the parties from whom purchases were made which were accounted for in the books of account are not found in existence. The AO further observed that the assessee has not made serious efforts to discharge to prove the genuineness of the transaction by producing those parties before the AO. The AO concluded that unaccounted funds have been utilised by the assessee for purchase of iron and steel in cash. The source of purchase was not establishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords. The finding of the CIT(A) is that the assessee had discharged all its onus and complied with his duties providing that purchases are genuine, parties are not bogus, goods have been received and only after receiving the goods, the sales were made. It has been further held that there is no finding of AO or no material on record which shows payments of impugned purchases came back to the assessee. The CIT(A) has also examined the issue in the light of provisions of s. 69C and held that if the AO makes an addition of unexplained purchase of Rs. 27,39,410 as income from other sources under s. 69C, then he has to allow deduction for incurring expenses on such purchases. Apart from above, we find undisputed sale of Rs. 28,17,207. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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