TMI Blog2018 (12) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable inference is that assessee had indeed effected the purchases, but not from the stated concern. In this case, assessee had canvassed that the impugned purchases was of essential raw materials which was consumed in the business of offset and plate processing. What is required to be added to the returned income is the savings effected by the assessee by making such purchases not from the stated concern, but from undeclared source in the grey market. Considering these aspects, in our view, it would be in the fitness of things that 12.5% of the impugned purchases be considered as an addition required to be made to the returned income in order to plug the leakage of revenue - thus restrict the addition to 12.5% of the impugned purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sheth, 356 ITR 451 (Guj.) and only a part representing the profit element embedded in the unsubstantiated purchases is added to the returned income. Support has also been drawn from the judgements of the Hon'ble Gujarat High Court in the case of CIT vs Bholanath Poly Fab. (P.) Ltd., 355 ITR 290 (Guj.) and CIT vs Vijay M. Mistry Construction Ltd., 355 ITR 498 (Guj.). 5. On the other hand, the ld. DR has defended the orders of the authorities below and pointed out that when assessee was afforded an opportunity to produce the party, it was not done and, therefore, the entire amount has been rightly added by the Assessing Officer as bogus purchases. 6. We have carefully considered the rival submissions. The orders of the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. Under these circumstances, the Hon'ble Gujarat High Court observed that what is required to be added to the returned income is the savings effected by the assessee by making such purchases not from the stated concern, but from undeclared source in the grey market. Considering these aspects, in our view, it would be in the fitness of things that 12.5% of the impugned purchases be considered as an addition required to be made to the returned income in order to plug the leakage of revenue. Thus, we set-aside the order of CIT(A) and direct the Assessing Officer to restrict the addition to 12.5% of the impugned purchases and delete the balance. 7. In the result, appeal of the assessee is partly allowed. Order pronounced in the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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