TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 1362
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.... the Assessment Year 2011-12. 2. At the outset, we find that there is a delay of 29 days in filing of appeal by the Revenue before us. In view of the concession given by the Ld. AR and the reasons stated by the Revenue for the said delay, we are inclined to condone the delay and admit the appeal of the revenue for adjudication. 3 The first issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in estimating the profit @ 8% of undisclosed contractual receipts of Rs. 9,16,500/- as against the estimation made by the Ld. AO at 40% of such receipts, in the facts and circumstances of the case. 4. The brief facts of this issue is that the assessee is an individual engaged in the business of trading of Iron and Steel. D....
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....(A) took shelter from the provision embedded in the Statute i.e. Section 44AD [though not specifically mentioned by the Ld. CIT(A) in his order] and resorted to estimate the profit at 8% of such undisclosed contractual receipts. Aggrieved, the revenue is in appeal before us on the following grounds: 1. That the Ld. CIT(A)-14, Kolkata has erred while estimating profit @ 8% gross Receipt instead of total Gross Receipt on service rendered by the assessee. 5.We have heard the rival submissions. It is not in dispute that the assessee had not reported the contractual receipt of Rs. 9,16,500/- in his profit and loss account. It is not in dispute that the said contractual receipt was duly subjected to deduction of tax at source to the tune of Rs....
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.... that the assessee made purchases of steel from M/s Rameswar Enterprises to the tune of Rs. 9,08,82,128/-, in the facts and circumstances of the case. The ld. AO observed that Shri Arun Kr. Mishra, proprietor of M/s Rameswar Enterprises was examined on oath, wherein, he denied having any transaction with the assessee. Based on this statement, the ld. AO sought to treat the purchase of Rs. 9,08,82,128/- as bogus. In response to this, the assessee stated that he had purchased goods and had received bills and challans duly mentioning VAT registration number of M/s Rameswar Enterprises. This fact is also reflected in the sales tax return filed by the assessee. The assessee had actually received those goods in its premises. The assessee is also ....
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.... assessee. Moreover, the ld AO himself had stated that all the purchases made by the assessee were sold during the year. The Ld. AO cannot accept the sales made out of alleged bogus purchase and treated the genuine purchase as bogus purchase. In any event it was pleaded that only the profit derived thereon could be brought to the tax. In support of this proposition, the assessee placed reliance on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Bholanath Poly Fabric Pvt. Ltd. reported in 355 ITR 290 wherein it was held that even if it is presumed that the purchase was made from bogus parties, but the purchase themselves cannot be treated as bogus as quantitative tally of goods purchased and sold are available and therefore....
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....s to take a more circumspect and judicious view and see what recourse is left to an assessee whose seller, for reasons of his own, denies the transaction. In view of the surrounding facts as discussed above, and respectfully following the ratio of judgment of Hon'ble Gujarat High Court as well as the other authorities cited above, I am inclined to sustained an addition of 1.25% on the disputed purchase of Rs. 9,08,82,128/- as being the profit element in the said purchases - which in any case is much higher than the net profit rate declared by the appellant with respect to the other transactions. The rest of the addition is hereby deleted." 10. Aggrieved the revenue is in appeal before us on the following grounds: 2. That the Ld. CIT(A)-1....
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.... is not the case of the ld. AO that the subject mentioned disputed purchases of Rs. 9,08,82,128/- were made by the assessee out of his undisclosed income. In any case, even if, the purchase made from M/s Rameswar Enterprises is not accepted by the Ld. AO then it could have been purchased from any other person, in view of the fact that the said goods had actually reached the premises of the assessee and had been duly sold later. The quantitative details maintained by the assessee in respect of all the purchases and sales are not disputed by the revenue. In these facts, the only recourse available is to bring to tax the profit embedded in the subject mentioned transaction. The assessee also reported gross profit and net profit as under: ASSE....