TaxTMI 
TaxTMI 
2023 (2) TMI 268
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act, 1961 (for short 'Act'), dated 24.12.2016 for assessment year 2014-15. 2. The assessee has assailed the impugned order on the following grounds of appeal before us: "1. On the facts and circumstances of the case, the ld. CIT(A) has erred in sustaining the addition of Rs.23,09,619 by estimating profit of 2.9% on alleged bogus purchase of Rs. 7,96,42,000, without any basis and without considering the past history of 7.4% GP for the preceding year i.e., A.Y.13-14. 2. On the facts and circumstances of the case, the ld. CIT(A) has erred in sustaining the addition of Rs.1,00,000 is disallowing out of total expenses of freight and hamali expenses. 3. On the facts and circumstances of the case, the ld. CIT(A) has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee firm which is engaged in the business of running of rice mill had e-filed its return of income on 14.11.2014 for the A.Y.2014-15, declaring an income of Rs.2,79,840/-. Subsequently, the case of the assessee firm was selected for scrutiny assessment u/s.143(2) of the Act. 5. During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed to have purchased paddy/broken rice aggregating to an amount of Rs.7,96,42,050/- from the following six parties, as under: S. No. Name of the party Total purchase 1. M/s. Maa Sharda Process, Raipur 2,41,05,500/- 2. M/s. Shri Krishna Processors, Raipur 2,29,21,500/- 3. M/s. Shri Samleshwari Foods, Abhanpur 73,28,750/-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 9. Controversy involved in the present appeal hinges around the solitary issue, i.e., quantification of the profit/income which the assessee would have made by purchasing the goods in question at a discounted value from the open/grey market. 10. Admittedly, it is a matter of fact borne from records that the assessee had failed to substantiate the authenticity of its claim of having purchased the goods in question, viz. rice/broken rice/bran from the aforementioned six parties. In fact, the assessee had not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s in question not from the aforementioned six parties but at a discounted value from the parties operating in open/grey market. Our indulgence in the present appeal has been sought by both assessee and the revenue to adjudicate the quantification of the profit which the assessee would have made by procuring the goods in question at a discounted value from open/grey market. 13. Considering the aforesaid facts, we are of the view that the addition in the hands of the assessee is liable to be restricted only to the extent of the profit which the assessee would have made by procuring the goods at a discounted value from the open/grey market, as against the inflated value at which the same had been booked on the basis of the bogus bills in it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trade. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- "So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is conc....