2017 (8) TMI 1671

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....llowances of bogus purchases to 8% of the total purchase ? [B] Whether the Appellate Tribunal has erred in law and on facts in deleting the addition of Rs.5,63,925/made on account of undisclosed income admitted during the course of survey ? 2. For the assessment year 200809 concerning this very assessee, similar question came up for consideration in Tax Appeals Nos.410 and 412 of 2017, which appeals came to be dismissed as under: "1. Tax Appeal No.410 of 2017 is filed by the Revenue to challenge the judgment of the Income Tax Appellate Tribunal dated 14.03.2016 raising following questions for our consideration: "[A] Whether the Appellate Tribunal has erred in law and on facts in restricting the disallowances of....

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....nd sales plus closing stock was Rs.8.27 crores. As per such figures, the assessee's gross profit margin would be worked out at 7.51% of its turnover. If entire purchases of Rs.5.66 crores are to be treated as bogus, the gross profit margin would be worked out to 100.18%. In other words, the gross profit would be higher than the total turnover. The assessee also pointed out that in the business of crushing the oil seeds, sometimes purchases of the agricultural raw material is made directly from producers and agriculturists from whom purchase bills are not available. In short, the assessee argued that the entire lot of purchases cannot be treated as bogus. 3. The Commissioner (Appeals) while holding that the purchases were not ba....

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....ned counsel for the Revenue and having perused the documents on record, we see no reason to interfere. The Commissioner of Income Tax (Appeals) as well as Tribunal both have accepted the assessee's contention that adding the entire amount of bogus purchases would give a completely distorted figure and the gross profit would be higher than the total turnover. Such bogus purchases were for offsetting the purchases from producers and agriculturists directly who would not have the billing facility. Only question seriously paused before us was, was the Tribunal justified in adopting the gross profit rate of 8% as against 25% adopted by the Commissioner of Income Tax (Appeals)? 7. When additions are made on the basis of gross profit ....