TMI Blog2018 (12) TMI 1691X X X X Extracts X X X X X X X X Extracts X X X X ..... entire purchase cannot be added and only the profit embedded in the sales can be added. We note that the assessee has shown the GP @ 3.5%. Relying on the decision of Hon ble Gujarat High Court in a similar case reported as CIT Vs. Bholanath Poly Fab Pvt.Ltd. [ 2013 (10) TMI 933 - GUJARAT HIGH COURT] and CIT Vs. Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] we consider the GP @ 5% would be sufficient in the facts and circumstances of the case for the interest of justice in this case. Addition on account of cash purchases u/s 40A(3) - HELD THAT:- Since the AO has not doubted the genuineness of the purchases made by cash by the assessee from M/s. Paul Egg Centre, by applying the ratio as held by Crescent Export Syndicate [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not repeated again for the sake of brevity. We note that AO has accepted the sale of eggs. However, he doubted the purchases, when he accepted the sales. The Ld.AR submitted before us that all the purchases and sales made are recorded regularly in the books. We note that the purchases were taken into account and charged to the P L Account. The natural corollary would be that the eggs have been purchased and then only it can be sold. The Inspector s report that certain selling parties are not traceable cannot be a ground for treating the entire purchases of eggs by assessee as bogus at the when AO accepts the sale of eggs shown by the assessee. Sale of eggs cannot happen without eggs are there in assessee s possession and so the entire add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flected in the books of account be not disallowed u/s. 40A(3) and u/s. 69C of the Act. The AO deputed an Inspector to inquire and report as to whether the parties from whom the purchases were made in cash were engaged in poultry farming or traders of the poultry products, who gave the following feed back report: 1. Regarding purchases made from Paul Egg Centre, Sahudangi, Dist: Jalpaiguri - on meeting the owner of Mrs. Paul Egg Centre Sri Dipak Paul, it was revealed by him that he used to sell the Eggs to stated that he Mrs. Sharma Egg Supplier, but in Cash only. And also Mrs. Paul Egg Centre is a trader in eggs and not engaged in Poultry Farming. 5. According to AO, the purchases of ₹ 4,26,021/- from M/s. Paul Egg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crossed cheque or bank draft but by bearer cheques and has computed the payments falling under provisions of section 40A(3) for ₹ 78,45,580/- and disallowed @ 20% thereon 15,69,116/-. It is also made clear that without the payment being made by bearer cheque these goods could not have been procured and it would have hampered the supply of goods within the stipulated time. Therefore, the genuineness of the purchase has been accepted by the Ld.CIT(Appeal) which has also not been disputed by the department as it appears from the order so passed by the learned Tirbunal. It further appears from the transaction that neither the Assessing Officer nor the CIT(A) has disbelieved the genuineness of the transaction. There was no dispute that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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