2018 (4) TMI 1802

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....ssed. 3. In ground no.2, the assessee has pleaded that the ld.CIT(A) has erred in confirming addition of Rs. 77,68,002/- by making an enhancement from Rs. 19,97,584/-.  4. Brief facts of the case are that the assessee has filed his return of income on 29.9.2008 declaring total income at Rs. 8,42,500/-. Assessment was framed under section 143(3) on 26.11.2010. The assessment was thereafter reopened and notice under section 148 was issued and served upon the assessee. On scrutiny of accounts it revealed to the AO that the assessee is engaged in manufacturing and trading in copper, brass. He made purchases from various persons. The ld.AO has made reference to nine parties to whom summons under section 131 were issued for verifying purch....

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....nt involved in these purchases would be treated as income of the assessee. The Tribunal has confirmed addition to the extent of 15% of the gross purchases. In other words, the ld.counsel for the assessee suggests that 15% of the Rs. 77,68,002/- is to be confirmed. The ld.DR, on the other hand, relied upon the order of theld.CIT(A), but unable to controvert contention of the ld.counsel for the assessee. 7. I have duly considered rival contentions and gone through the record carefully. The ld.CIT(A) has relied upon order of his predecessor in the Asstt.Year 2009-10, which has been considered by the Tribunal in ITA No.822/Ahd/2014. The Tribunal has upheld the addition to the extent of 15% of the alleged purchases. The finding recorded by the ....

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....Officer ought to have disallowed only the profit element instead of the entire purchases. We notice from the case file that the assessee had quoted umpteen number of judicial precedents in this regard. Hon'ble jurisdictional high court's decision in Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) supports this latter plea. We are therefore of the view that larger interest of justice would be served in case only the profit element @15% in the above bogus purchases is disallowed/added rather than the entire amount. Whilst concluding so, it is made clear that we have duly taken into account the fact that the assessee is a trader than manufacturer so as to arrive at the above disallowance percentage. We accordingly direct the Assess....