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TMI Blog2024 (8) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... following grounds of appeal: "1. Whether on facts and in the circumstances of the case and in law, the Ld. CIT (A) was justified in directing the AO to make GP addition without appreciating the fact that in the investigation carried out by the Directorate of Investigation of Gujarat & Mumbai, it was found that M/s Delight Diam Private Limited and M/s Rajat Diamonds are paper entities?" 2. Whether on facts and in the circumstances of the case and in law, the Ld. CIT (A) was justified in directing the AO to make GP addition without appreciating the fact that Hon'ble Gujarat High Court in the case of M/s N K protein Ltd has given direction for 100% disallowance of bogus purchase and the SLP filed by the assessee has been dismissed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) that, if the purchases are bogus, it would be impossible for the assessee to complete the business transaction and that if the purchase is bogus, the corresponding sale also must be bogus or else the transaction would be impossible to complete and as a necessary corollary, unless the corresponding sale is held to be bogus, the purchase also cannot be held to be bogus, rather it would be a case of purchase from bogus entities/parties. That view has been upheld by the Tribunal in principal while dismissing the appeal of the Revenue. In view of the above, we are of the opinion that the questions of law proposed as (a), (b), and (c) in the appeal cannot be said to be substantial questions of law. Insofar as the question of law frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgement than of N.K. Industries, the High Court of Gujarat in case of PCIT v. Surya Impex [2023] 148 taxmann.com 154 (Gujarat) also held that "11. Having found that the Assessing Officer has chosen not to reject the books of accounts of the assessee and had made the estimated additions of the pieces of the purchases. Both, the CIT (Appeals) and the Tribunal, have concurrently and rightly held to make the additions, which the CIT (Appeals) had done @ 12.5% of the impugned purchases, which have been reduced and restricted to 6%. It will not be out of place to make a mention that the Assessing Officer's inquiry was based on the report of the Investigation Wing, Mumbai, the copy of the statement of Shri Bhanwarlal Jain and others had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra). In the other cases of Shri Bhanwarlal Jain also, addition rates are 3% to 5% where no further challenge possibly is there or it has not been processed further. This Court finds that no question of law, much less any substantial question of law arises for consideration of this Court." 5.3.9. Thus, adding back purchases without questioning the sales is not correct. And following the jurisdictional HC decisions, the AO has to bring to tax as additional income, the gross profit on the bogus purchases of Rs. 40,56,526/-. The rate of gross profit to be applied on these bogus purchases is to be determined as the same gross profit ratio of income returned to the genuine purchases in line with the jurisdictional HC decision." 5. We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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