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TMI Blog2021 (12) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... in enhancing the addition made by the Ld AO of Rs. 19, 37,782/- to Rs. 1,55, 02,257/- by wrongly treating 100% of the purchases from MVAT party as bogus against 12.5% made by the Ld AO and further erred in not treating the whole purchases as genuine and the reasons assigned for doing so are wrong and contrary to the provision of Income Tax and rules made there under". 3. At the outset, it is observed that filing of appeal is time barred by three days and the assessee filled petition for condonation of delay stating that assessee's mother was seriously ill and suffering from heart ailment and earlier chartered accountant deserted the assessee and did not advise him to compile the details, thus the appeal could not be filed in time. It is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed purchases of Rs..1,55,02,257/- made from various parties as mentioned in the Assessment Order as non-genuine for the reason that assessee could not file lorry receipts, transportation details. However, as the assessee recorded purchases in the Books of Accounts he was of the view that only profit element embedded in such purchases should be disallowed. Accordingly, 12.5% of the purchases amounting to Rs..19,37,782/- was disallowed. Assessee preferred appeal before the Ld.CIT(A) contending that all the purchases made from such parties are genuine and alternatively addition should be restricted only to the percentage of Gross Profit shown on genuine purchases. However, the Ld.CIT(A) enhanced the disallowance to 100% of purchases of Rs..1,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA No. 1004 of 2016 dated 11.02.2019. (iv) Pr.CIT v. Rishabhdev Technocable Ltd [115 Taxmann.com 333 (Bom-HC)]. 7. Ld. Counsel for the assessee further submitted that assuming that the assessee made purchases in grey market what was saved by the assessee by way of VAT is only 4% and in addition the probable profit element may at 1% totaling to 5%. Hence estimating the profit element at 12.5% is not justified. 8. Ld. DR vehemently supported the orders of the authorities below. 9. Heard both sides, perused the orders of the authorities below. An identical issue has come before the Coordinate Bench in the case of Shri Pravin C. Bokadia v. ITO in ITA.No. 3552/Mum/2019 dated 17.07.2020 wherein the Ld.CIT(A) enhanced the addition to 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by the Hon'ble Bombay High Court was in context of the order passed by learned CIT(A) under section 263 of the income tax act, wherein the ITAT had upheld the order of the learned CIT, invoking his jurisdiction u/s. 263. The issue was expenditure incurred in the maintenance by a hotel. In contrast the present case is a case where the assessee is a dealer in steel and disallowance has been done by the Assessing Officer on a finding that the assessee has made purchases through grey market. 8. In our considered opinion by no stretch of imagination it can be said that there is any similarity in the facts upon which the honourable jurisdictional High Court has rendered the above said decision and the facts of the present case." 10. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrous metals and the submission of the Ld. Counsel for the assessee that the benefit what the assessee got by way of VAT is 4% and the probable profit element may be adopted at 1% totaling to 5%, it would be justified if the profit element embedded in those purchases are estimated at 6%. Accordingly, I direct the Assessing Officer to estimate the profit element from the non-genuine purchases at 6% and restrict the disallowance of purchases to 6% and compute the income accordingly for the assessment year under consideration i.e. A.Y: 2009-10.
13. In the result, appeal of the assessee is partly allowed.
Order pronounced on 01.10.2021 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board. X X X X Extracts X X X X X X X X Extracts X X X X
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