TaxTMI 
TaxTMI 
2026 (1) TMI 1472
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.... is noted that the Revenue's appeal is delayed by '29' days, for which, the DCIT has filed an affidavit explaining the reason for delay and has filed application for condoning the delay, to which, the Ld.Counsel of the assessee didn't raise any serious objection, consequently, the delay of '29' days in filing of the appeal stands condoned; and the appeal filed by the Revenue is taken up for hearing on merits. 3. The main grievance of the Revenue is against the action of the Ld.CIT(A) restricting the addition made on alleged bogus purchases to the extent of 8.87% of the gross profit (GP). 4. The brief facts are that the assessee is noted to be a Private Limited Company and claims to be engaged in the business of trading electrical part....
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....rbrik which is a paper entity is nothing but accommodation entry and held it to be in-genuine in the light of the investigation conducted by the Investigation Directorate, and also noted that the said company has been "struck off". Hence, the AO treated the transaction/purchases shown from M/s.Barbrik to the tune of Rs.1,20,99,998/- as bogus and added it u/s. 69C of the Act i.e. unexplained expenditure. 5. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who didn't countenance the action of the AO disallowing the entire purchase consideration of Rs.1,20,99,998/- from M/s.Barbrik, and gave partial relief to the assessee by restricting the addition to profit-element from the transaction with M/s.Barbrik i.e. @8.87% of the g....
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.... [2013] 355 ITR 498 (Gu)) and in the case of CIT v. Bholanath Poly Fab (P.)Ltd. [2013] 355 ITR 290 (Guj). The view taken by the Tribunal in the case of Vijay Proteins Ltd. v. Asstt. CIT [1996] 58 ITD 428 (Ahd.) came to be approved. If the entire purchases were wholly bogus and there was a finding of fact on record that no purchases were made at all, counsel for the Revenue would be justified in arguing that the entire amount of such bogus purchases should be added back to the income of the assessee. Such were the facts in the case of Pawanraj B. Bokadia (supra). This being the position, the only question that survives is what should be the fair profit rate out of the bogus purchases which should be added back to the income....
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....01,420/-, which return was reopened u/s. 147 of the Act based on the information from the Investigation Wing, (Kolkata) that M/s.Barbrik had indulged in providing fraudulent invoices for facilitating accommodation entry for entities [like assessee], so that beneficiary entity could suppress its profits; and since the assessee had shown to have booked expenditure using invoices/bills of M/s.Barbrik to the tune of Rs.1,20,99,998/-, the AO recorded his satisfacton that there is escapement of income, and issued notice u/s. 148 of the Act. Pursuant to the notice of reopening, the assessee is noted to have contested the allegation and asserted that they had carried out genuine transaction with M/s.Barbrik; and in order to prove that transaction w....
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.... that without purchases, no sales could have taken place; and (ii) when the AO has accepted the sales only the profit element could have been added. The proposition of the Ld.CIT(A) that when the sales have been accepted by the AO, the purchases can't be disallowed, is applicable, when quantity of goods purchased is not disputed and in such cases, the element of inflation of cost of purchases is only considered to be added by addition of the extra profit derived from such transaction [refer the ratio of the decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Sheth supra]. But in the present case, the question is whether the expenses claimed by the assessee to the tune of Rs.1,20,99,998/- is genuine or not and whether i....