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TMI Blog2017 (3) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... ef facts of the case are that the assessee filed return of income on 23.9.2010 declaring a total income of Rs. 17,77,230/-. The case of the assessee was selected for scrutiny and statutory notices under section 143(2) and 142(1) of the Act were issued and served upon the assessee. During the course of assessment proceedings, the AO observed that the assessee has made total purchases to the tune of Rs. 4.95 crores out of which the above purchases, the purchase of Rs. 1 lakhs were made from 46 parties. To verify the genuineness of the purchases, the AO issued notices u/s 133(6) to several parties by registered post but in the following cases, notices sent to the parties were not served : Name of the parties TIN Amount (Rs.) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sending 133(6) notices and making field enquiries, but has not found any concrete evidence to doubt the genuineness of the payments being shown by the appellant through the bank account. The AO has also definitely not been able to question the availability of the inventory that has been subsequently sold. To extent, the examination of that aspect has not created any doubt in terms of the purchases. However, as far as the evidence submitted by the appellant is also concerned, the appellant has filed his own books, purchase bills/challans, ledger account and its own bank statement to further his argument. The fact that the payments are being made through cheques is not something that is being doubted. In fact that is the contentious issue; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. I am guided by the' ratio of decision of the Hon'ble Gujarat High Court in the case of CIT Vs Simit P. Sheth pronounced on 16.1.2013 in tax appeal No.5531 of 2012 wherein the Hon'ble Court have held that when the total sale is accepted by the AO, then the entire purchases cannot be added to the income of the appellant. The Hon'ble Court have, therefore, held that when the total sale is accepted by the AO, then the entire purchase cannot be added to the income of the appellant. The Hon'ble Court have, theefore, held that fair profit ratio would' be needed to be added back to the income of the assessee. Therefore, 12% of the purchases of Rs. 49,74,252/- which works ( out to Rs. 5,96,910/- is upheld for lack of c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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