TMI Blog2021 (3) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-4, Mumbai [in short CIT(A) ] and arises out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961, (the Act ). 2. During the course of hearing, the Ld. counsel for the assessee submits that he would not like to press the 1st and 3rd ground of appeal. Considering the submission of the assessee, we dismiss the 1st and 3rd ground of appeal as not pressed. We then turn to the 2nd ground of appeal which reads as under : 2. Addition on account of alleged non-genuine purchases The CIT(A) erred in upholding the action of the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made from the above party remained unverifiable. Considering the facts and circumstances of the case, he estimated profit @ 8% of the disputed purchases of ₹ 13,26,130/- and thus made an addition of ₹ 1,06,090/-. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that vide order dated 03.05.2019, the Ld. CIT(A) confirmed the above disallowance made by the AO by observing that : 6.3.32 As narrated earlier, the AO in this case has held that the parties from which purchases were made by the appellant were found to be bogus and that is the reason for which it was not produced during the assessment proceedings. Not having doubted the consumption/sales, the motive behind obtaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard the rival submissions and perused the relevant materials on record. We are of the considered view that considering the facts and circumstances of the present case, the decision in M/s Mohommad Haji Adam Co. (supra) relied on by the Ld. counsel merits consideration. In that case, during the course of survey operations in the case of entities from whom the assessee had claimed to have made purchases, the Department collected information suggesting that such purchases were not genuine. The AO noticed that the assessee had shown purchases of fabrics worth ₹ 29.41 lakhs from three group concerns, namely M/s Manoj Mills, M/s Astha Silk Industries and M/s Shri Ram Sales and Synthetics. On the basis of statement recorded durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the portion of the order of the CIT(A) to that extent he permitted the AO to tax the assessee on the basis of difference in the GP rates. In further appeal before the Hon ble Bombay High Court, the Revenue referred to the decision of the Division Bench of the Hon ble Gujarat High Court in the case of N.K. Industries Ltd. v. DCIT in Tax Appeal No. 240 of 2003 and connected appeals decided on 20.06.2016 and also pointed out that the SLP against such decision was dismissed by the Hon ble Supreme Court. The Hon ble Bombay High Court held : 8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of ₹ 3,70,78,125/- which comes to ₹ 20,98,621.88 we think it fit to direct the revenue to add ₹ 20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue. We find that the facts in the instant case are similar to the above decision. Following the same, we set aside the order of the Ld. CIT(A) and direct the AO to restri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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