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2018 (12) TMI 1691 - AT - Income TaxBogus purchases u/s 69C - AO has accepted the sale of eggs. However, he doubted the purchases, when he accepted the sale - HELD THAT:- Sale of eggs cannot happen without eggs are there in assessee’s possession and so the entire addition of purchase of eggs of certain parties as done in this case cannot be countenanced. AO cannot disallow the purchase without reducing either the sales or the stock by a matching sum. So we are of the opinion that even if the eggs purchased by the assessee are not from the parties shown in the books, the assessee infact had purchased the eggs from some other party which was eventually sold. So the entire purchase cannot be added and only the profit embedded in the sales can be added. We note that the assessee has shown the GP @ 3.5%. Relying on the decision of Hon’ble Gujarat High Court in a similar case reported as CIT Vs. Bholanath Poly Fab Pvt.Ltd. [2013 (10) TMI 933 - GUJARAT HIGH COURT] and CIT Vs. Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] we consider the GP @ 5% would be sufficient in the facts and circumstances of the case for the interest of justice in this case. Addition on account of cash purchases u/s 40A(3) - HELD THAT:- Since the AO has not doubted the genuineness of the purchases made by cash by the assessee from M/s. Paul Egg Centre, by applying the ratio as held by Crescent Export Syndicate [2008 (7) TMI 977 - CALCUTTA HIGH COURT] of the opinion that no disallowance was warranted so, we order deletion of the addition.
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