TaxTMI 
TaxTMI 
2024 (10) TMI 915
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....CIT(A) had partly allowed appeal of the Assessee against the Assessment Order, dated 01/03/2023, passed under Section 147 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 2. The appeal filed by the Assessee was accompanied by applicable seeking condonation of delay of 4 days in filing the appeal. The delay was on account of time taken to obtain necessary legal advice. In our view, the delay in filing the appeal preferred by the Assessee was not intentional. The Learned Departmental Representative also did not raise any serious objections to the application seeking condonation of delay. Accordingly, the same is allowed and we proceed to adjudicate the appeal on merits. 3. The Assessee has raised following grounds of ....
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.... "1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in restricting the addition @ 12.5% of the bogus purchases as against entire bogus purchases added by the AO without appreciating the fact that the assessee is one of the beneficiaries of the bogus purchases from Rathi Style and textile Private Limited and SVG Style and Textile Company Private Limited entities of One World Group involved in bogus purchases and sales transactions wherein no actual goods were supplied/transferred? 2. Whether on the facts and in circumstances of the case in law the Ld CIT(A) has erred in not relying on Hon'ble Supreme Court decision in the case of NK Proteins Ltd. us DCIT (2017)292CTR354(SC) ....
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....s in brief are that the Assessee is a private limited company engaged in the business of retail sale of readymade garments, hosiery goods and articles of clothing. The Assessee filed return of income for the Assessment Year 2018-19 declaring income of INR 1,687,910/-. The case of the Assessee was selected for scrutiny and assessment was completed under Section 147 read with section 144B of the Act vide Assessment Order, dated 01/03/2023, at assessed income of INR 2,50,59,759/- after making additions of INR 23,371,849/- under Section 69C of the Act. The Assessing Officer was of the view that the Assessee had taken accommodation entries for bogus purchase from the following entities: Name of the Party Amount (INR) Rathi Style and Tex....
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....be disallowed. It was submitted that at best the profit element embedded in alleged bogus sales can be brought to tax in the hands of the Assessee. It was further submitted that the Assessee had already disclosed a gross profit margin of 50.77% during the relevant previous year. Thus, the CIT(A) erred in making further addition of 12.5% alleged bogus purchases without taking into consideration the gross profit margin already declared by the Assessee. In support of the aforesaid contention, reliance was placed on the decision of the Hon'ble Bombay High Court in the case of The Principal Commissioner of Income Tax-17 Vs. Mohommad Haji Adam & Co.: Income-Tax Appeal Nos. 1004, 1012, 1013, 1059, 1064, 1075, 1095 And 1204 of 2016, 11/02/2019 repo....
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....g that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. 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 he applied without reference to the facts. In fact in paragraph 8 of the same ....
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....fferent in gross profit margins of alleged bogus purchases and other genuine purchases. Thus, the Hon'ble Bombay High Court provided a valid parameter for determining the amount of profits embedded in purchases made from grey market which could be adopted to determine the quantum of addition in a case of alleged bogus purchases representing the benefit drawn by an assessee in making purchases from grey market. We note that in the present case it has been contended by the Assessee that the Assessee has disclosed overall gross profit margin of 50.77%. Accordingly, keeping in view the above judgment of the Hon'ble Bombay High Court in the case of Mohommad Haji Adam & Co. (supra), the Assessing Officer is directed to compute/verify the gross pr....