TMI Blog2021 (12) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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%. We 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 - Appeal of the assessee is partly allowed. - ITA. No. 1348/MUM/2020 - - - Dated:- 1-10-2021 - Shri C.N. Prasad, Hon'ble Judicial Member For the Assessee : Shri Prakash Junjhunwala For the Department : Shri Sanjay J. Sethi ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art ailment and earlier chartered accountant did not advise the assessee to compile the details to file the appeal in time, in view of the above I admit the appeal by condoning the delay of three days in filing the appeal. 5. Briefly stated the facts are that, assessee an individual engaged in the business of supplier of ferrous and non-ferrous metals, filed return of income on 29.09.2009 declaring income of ₹.3,74,328 for the A.Y.2009-10 and the return was processed u/s. 143(1) of the Act. Subsequently, Assessing Officer received information from the DGIT (Investigation), Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. The assessment was reopened U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2020 submits that identical issue has come up before the Coordinate Bench wherein the Ld.CIT(A) enhanced the addition to 100% of non-genuine purchases relying on the decision in the case of Shoreline Hotel Pvt. Ltd., (supra) and the Tribunal considering the decision of the Hon'ble Jurisdictional High Court in the case of M. Haji Adam Co. (ITA.No. 1004 of 2016 dated 11.02.2019) directed the Assessing Officer to make the disallowance in accordance with the ratio of the decision of the Hon'ble Bombay High Court in the case of M. Haji Adam Co. (supra). Therefore, Ld. Counsel for the assessee requested that addition be restricted to the difference between the Gross Profit that is shown by the assessee on normal purchase as against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M. Haji Adam Co. (supra). On a perusal of the Coordinate Bench decision in the case of Shri Pravin C. Bokadia v. ITO (supra), I find that the Ld.CIT(A) enhanced the disallowance to 100% of the non-genuine purchases placing reliance in the case of Shoreline Hotels Pvt. Ltd., (supra), the Tribunal noticed the distinguishing features of the Hon'ble Bombay High Court decision in the case of Shoreline Hotels Pvt. Ltd., (supra) to the cases where there is a disallowance made under non-genuine purchases and the observation of the Tribunal is as under: - 7. Upon assessee's appeal learned CIT(appeals) has enhanced the addition to hundred percent. In doing so she has referred to the honourable jurisdictional High Court decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases cannot be treated as non-genuine. The Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [355 ITR 290] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view has been taken by the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth [38 taxman.com 385]. Simply because the parties were not produced the entire purchases cannot be added as held by the Bombay High Court in the case of CIT v. Nikunj Eximp [216 Taxman.com 171]. 12. I agree with the view of the lower authorities that there should be an estimation of profit element fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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