TMI Blog2016 (10) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 3.56%. Considering the above, we find, the CIT (A) is justified in adopting 12.5% of the suspected purchases for addition. Therefore, in our opinion, the order of the CIT (A) on this issue is fair and reasonable and it does not call for any interference. - I.T.A. No. 4384/M/2015, I.T.A. No. 4527/M/2015 - - - Dated:- 30-9-2016 - SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER Assessee by : Shri Dilip Sanghavi Revenue by : Shri Prakash Pathade, DR ORDER Per D. Karunakara Rao, AM There are two appeals under consideration and they are cross appeals involving the assessment year 2009-2010. Since, the issues involved in these appeals are inter-connected, therefore, for the sake of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases and the merits related issues relating to the conclusion of the CIT (A) in confirming the GP addition @ 12.5% of the suspected purchases amounting to ₹ 25,32,622/-. 4. Briefly stated relevant facts of the case are that the assessee filed the return of income declaring the total income of ₹ 18,25,970/-. Regular assessment was duly completed u/s 143(3) of the Act. Assessee is Civil Contractor and was surveyed u/s 133A of the Act on 4.12.2010 relevant to the AY 2011-12. Information was received from the DGIT (Inv) office regarding certain bogus purchases by the assessee from S. S. Enterprises and National Trading Co. As per the assessment order, the said parties filed the affidavits with the Sales Tax Department infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld DR in this regard, we dismissed the said ground as not pressed. 7. Referring to the Ground no.2, Ld Counsel for the assessee submitted that the addition of additional GP of ₹ 3,16,578/- only increased the unearned GP of the assessee. However, referring to the Gujarat High Court judgment in the case of CIT vs. Simit P Sheth in ITA No.553 of 2012, dated 16.1.2013 (356 ITR 451), Ld Counsel for the assessee submitted the said judgment is relevant for the proposition that the only profit element embedded in such purchases can be added to the income of the assessee when the assessee purchased goods in grey market without bills and made up the same with the accommodation entries / bills. However, the Ld AR is of the opinion that the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering whether the entire amount of purchases should be added back to the income of the assessee or only the profit element embedded therein was to ascertain whether the purchases themselves were completely bogus and non existent or that the purchases were actually made but not from the parties from whom it was claimed to have been made and instead may have been purchased from grey market without proper billing or documentation. In the present case, CIT believed that when as a trader in steel the assessee sold certain quantity of steel, he would have purchased the same quantity from some source. When the total sale is accepted by the Assessing Officer, he could not have questioned the very basis of the purchases. In essence therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that in the immediately preceding year to the assessment year under consideration the assessee had declared gross profit @ 3.56% of the total turnover. If the yardstick of 30%, as adopted by the Commissioner, is accepted GP rate will be much higher. In essence, the Tribunal only estimated the possible profit out of purchases made through non-genuine parties. No question of law in such estimation would arise. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick can be adopted. 10. From the above, we find, the essential facts are comparable to that of the present case. They are: sales account is undisturbed, presumption of purchase of goods outside the books and also withou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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