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2023 (5) TMI 105 - AT - Income TaxEstimation of income - bogus purchases - HELD THAT:- We find that since the sales made out of disputed purchases have been accepted as such by the ld. AO, it would be just and fair to bring to tax only the profit element embedded in the value of such disputed purchases in view of the fact that assessee could have made purchases from the grey market in order to have some savings in the form of cash discount and indirect taxes. We find that this Tribunal in the case of assessees engaged in the trading of iron and steel had been consistently estimating the profit element to be at 5%. Hence, we direct the ld. AO to estimate the profit element at 5% of disputed purchases, which in our considered opinion, would meet the ends of justice in the peculiar facts and circumstances of the instant case. Accordingly, the ground No.2 raised by the assessee is partly allowed and ground raised by the Revenue is dismissed. Unexplained cash credit u/s.68 - AO concluded that assessee company had failed to prove the identity and creditworthiness of the investors - HELD THAT:- As in the hands of M/s. BIEL, the substantive addition made thereon, was not deleted on merits. It was deleted only on a technical ground of assessment being framed on a non-existent entity. We hold that since substantive addition has not been deleted by this Tribunal on merits, the addition made on protective basis in the hands of the assessee company had to be examined. But the excruciating fact that remains uncontroverted in the instant case is that both the ld. AO as well as the ld. CIT(A) agree that the transactions between BIEL and assessee company are genuine. Further all the documentary evidences submitted by the assessee vis-a-vis M/s. BIEL with regard to receipt of share capital and OCPS had not been rejected by the ld. AO and no deficiencies were found thereon. Hence, it could be safely concluded that assessee company had duly discharged its complete onus with regard to Section 68 of the Act. Hence, there could not be any addition u/s.68 of the Act even on merits on protective basis or on substantive basis. Hence, we hold that the ld. CIT(A) had rightly deleted the addition made u/s.68 of the Act in the hands of the assessee company on merits also. Accordingly, the ground raised by the Revenue is dismissed.
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