2023 (4) TMI 1470

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....n sustaining the action of the Assessing Officer. 2. Since the issues raised in both these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. 3. Briefly stated the facts are that, assessee filed return of income on 27.09.2009 and 29.09.2011 declaring income of Rs. 67,966/- and Rs. 45,24,331/- for the A.Y. 2009-10 and A.Y. 2011-12 respectively, and the returns were processed u/s. 143(1) of Income-tax Act, 1961 (in short "Act"). The case was reopened u/s. 147 of the Act by issue of notice u/s. 148 of the Act after recording the reasons. Notice u/s. 142(1) of the Act was issued along with the questioner. In response Authorised Representative of the ....

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....or the A.Y. 2009-10 and 2011-12 respectively as bogus and non-genuine purchases and added a sum of Rs. 27,16,110/- and Rs. 4,09,722/- being 5% and 3% of the purchases for the A.Y. 2009-10 and 2011-12 respectively. On appeal the Ld. CIT(A) sustained the action of the Assessing Officer in estimating the Gross Profit at 5% and 3% for the A.Y. 2009-10 and A.Y. 2011-12 respectively. Against these orders of the Ld. CIT(A) assessee is in appeal. 6. Aggrieved, assessee preferred appeal before us raising following similar grounds except for change in figures in both the Assessment Years. Grounds raised by the assessee in ITA. No. 3125/Mum/2022 are reproduced below: - "1. On the facts and circumstances of the case and law, the Ld. CIT(A) ....

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.... material placed on record and perused the orders of the authorities below. It is not in dispute that sales have been accepted as genuine from out of these purchases. When the sales have been accepted as genuine the entire purchases cannot be treated as non-genuine. The Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [355 ITR 290] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view has been taken by the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth [38 taxman.com 385]. Simply because the parties were not produced the entir....

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....p. Since, the assessee had made certain purchases from those parties, the ld. AO proceeded to examine the veracity of the purchases made thereon. It is not in dispute that assessee had indeed made payments for those purchases to the concerned suppliers by account payee cheques. It is not in dispute that assessee had furnished the details of corresponding sales made out of disputed purchases by producing the relevant sale invoices, ledger copy of the parties, bank statement showing payments made through account payee cheques, stock register, copy of affidavits of persons confirming the transactions with the assessee, confirmation from parties confirming sales made to assessee alongwith their copy of ITR, their bank statements, PAN, their aff....