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2020 (4) TMI 126 - AT - Income TaxBogus purchases - Transaction with hawala/suspicious dealers - HELD THAT:- On perusal of records, the assessee is into the business of whole seller and reseller in dyes and chemicals and pharma items. The assessee has declared gross profit of 5.61% to 5.91% for AY 2009-10 to AY 2011-12. Although, the rate of gross profit declared by the assessee in his books of accounts is not a correct yardstick to determine the profit element in alleged bogus purchases, but if you go through the nature of business of the assessee and industry practice, at any point of time 100% additions cannot be sustained. Further, although the assessee has cited the decision in the case of Mohammad Hazi Adam and Company vs PCIT [2019 (2) TMI 1632 - BOMBAY HIGH COURT] and requested to scale down additions made by the Ld. AO towards gross profit rate of other purchases, but the claim of the assessee cannot be accepted, because the gross profit declared by the assessee in its regular books of accounts cannot be considered as correct in view of the fact that there is some sort of doubt is still there, in respect of purchases claim to have made from certain parties. After considering facts and circumstances of this case and consistent with view taken by the co-ordinate bench in number of cases a reasonable amount of profit needs to be estimated of alleged bogus purchase to meet the ends of the justice. Hence, by taking into account over all facts and circumstances of this case and also, consistent with view taken by the co-ordinate bench in similar cases, we direct the Ld. AO to estimate 12.5% profit on alleged bogus purchases.
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