TMI Blog2023 (6) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... he end of financial period thus including in the closing stock then no profit was flowing from such transaction if it is gathered that the Assessing Officer alleged the same as bogus purchases. When the goods is physically available and shown in the stock register of assessee and even the assessee did not pay any sale consideration during the relevant financial period, in such a situation we are unable to see any accruing of any benefit or profit to the assessee which may attract charging provisions of tax. To cover up all possible leakage of revenue we find it appropriate to follow the preposition rendered in the case of PCIT vs. Mohd. Hazi Adam [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] and restrict the addition to the element of profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. 5. That on the facts and circumstances of the case and in law, the CIT(A) was not justified and has erred in sustaining addition of Rs. 61,362/- on the presumption that commission of 2% was paid for arranging accommodation entries aggregating to Rs. 30,68,100/-. 3. The ld. AR submitted that the ld. CIT(A) was not correct and justified in sustaining 25% of addition made by the Assessing Officer by relying on the decision of Hon ble High Court of Gujarat in the case of CIT vs. Bholanath Polyfab P. Ltd. 355 ITR 290 (Guj.) amounting to Rs. 7,67,025/- being 25% of Rs. 30,68,100/- towards purchases made from M/s. Mani Prabha Impex P. Ltd. The ld. counsel also submitted that the ld. CIT(A) was also not justified in sustaining the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade from Mani Prabha Impex P. Ltd. are treated as bogus because the assessee before the authorities below as well as before this bench has submitted stock summary for FY 2009-10, ledger account sales invoice issued by M/s Mani Prabha, stock register of LD-5 and LD-6 which is available at pages 63 to 67 of assessee paper book. He further submitted that the stock register shows that the goods purchased from M/s. Mani Prabha Impex P. Ltd. on 07.01.2010 was appearing in the closing stock as on 31.03.2010 and these items remained unsold at the end of financial period. The ld. AR further submitted that the stock register shows that this stock have been valued at cost and trading account debit side entry is tallying with the closing stock on cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of assessee and therefore no addition can be made on estimation basis. Secondly, as per judgment of Hon ble Bombay High Court in the case PCIT vs. M/s. Mohd. Hazi no addition is warranted even if the purchases are treated as bogus as the assessee did not sold the stock purchased from M/s. Mani Prabha during relevant period and same was shown as including in the closing stock as on 31.03.2010. Alternatively the ld. AR has contended that maximum to maximum GP rate declared by the assessee can be added as profit element embedded in the such purchases. In my humble understanding the quantum of purchases and the fact that at the end of year the entire impugned stock/purchases under allegation were not sold and thus including in the clos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty facts and circumstances of the case I find that there was no logic or valid reason for the ld. CIT(A) to make disallowance of 25% of total purchases and to confirm addition on account of commission against accommodation entries in absence of any positive adverse material substantiating the factum of providing and receiving accommodation entry against commission payment in cash by the assessee. 10. However, to cover up all possible leakage of revenue I find it appropriate to follow the preposition rendered by Hon ble High Court of Bombay in the case of PCIT vs. Mohd. Hazi Adam (supra) and restrict the addition to the element of profit embedded therein. The assessee contents that his declared GP rate as per audited books of accounts is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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