TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 417
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....case are that the assessee had filed its return of income for A.Y. 2017-18 on 07.10.2017 declaring income of Rs. 99,03,586/-. The case was selected for scrutiny under CASS. The assessee is a partnership firm engaged in the business of real estate construction and development activity. In the course of assessment, the AO had called for the details of purchases made by the assessee. Out of the details as submitted, the AO had selected four parties for verification to whom notice u/s 136 of the Act was sent. However, no compliance was made by any of the four parties and all the notices were returned unserved. Thereafter, the AO had required the assessee to produce those four parties, which was also not complied. Therefore, the AO had treated t....
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....erved. The assessee had also failed to produce the four parties before the AO in spite of specific requisition. It was also found that VAT registration of all the four parties were cancelled. Further no evidence for transport of materials purchased from them was brought on record. The ld. SR-DR submitted that ld. CIT(A) had categorically held that the purchases made by the assessee from those four parties were bogus. Under the circumstances, he should have confirmed the entire addition of Rs. 3,50,55,146/- on account of bogus purchase made from the four parties. The ld. SR-DR contended that the direction of the Ld. CIT(A) to make addition for the profit element embedded in the bogus purchases had completely nullified the addition as the pro....
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....- Left 3 Vishal Rohitbhai Patel (Prop of Sainath trading) 60,10,257/- Incomplete address 4 Mahi Traders 31,49,546/- Left Total 3,50,55,146/- 8. The undisputed facts are that the notice u/s 133(6) sent by the AO to these four parties was returned unserved and the assessee had failed to produce these parties before the AO. Neither any alternate address of the parties was brought on record nor it was explained as to how the four parties had vanished. Merely because the assessee had made the payments through cheque and produced the invoices, the purchases could not have been treated as genuine. The AO had specifically required the assessee to produce evidence for delivery of goods, which w....
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....s extent I agree with the AO. 9. After holding that the purchase of Rs. 3,50,55,146/- made from the four parties was bogus, the ld. CIT(A) had directed to restrict the addition on account of bogus purchases to the extent of gross profit element embedded in these bogus purchases. The contention of the Revenue is that the addition for entire bogus purchase should have been upheld. There is no dispute to the fact that the assessee was engaged in construction activity and the building could not have been constructed without the materials viz. kapchi, bricks, sand, cement, tiles, painting materials etc. purchased from the four parties. Against the material purchase of Rs. 8,64,94,449/- during the year, the assessee had disclosed project incom....
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.... In the case of Premkumar B. Rathi (59 taxmaznn.com 203) (Guj.), Hon'ble Gujarat High Court had upheld the disallowance of 10% of bogus purchases as confirmed by the Tribunal. Similarly, in the case of Simit P. Sheth (38 taxmann.com 385) (Guj), the Hon'ble Gujarat High Court had held that only profit element embedded in purchases made from accommodation entry providers could be added and upheld the addition of 12.5% sustained by the Tribunal. In the case of Bholanath Poly Fab P. Ltd. (40 taxmann.com 494) (Guj,) also, the Hon'ble Gujarat High Court had reiterated that only profit margin embedded in bogus purchases could be subjected to tax and not the entire purchases. Similarly, Hon'ble Gujarat High Court in the case of Kesari Exports, (174....