ITO 19 (1)(2), MUMBAI vs. BABULAL JETHARAMJI VISHNOI, MUMBAI

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in directing the ld. AO to allow set off of the gross profit already shown by the assessee from the addition of profit rate at 12.5% on account of bogus purchase in the facts and circumstances of the case.

We have heard the rival submissions. We find that assessee is an individual running proprietary concern in the name of M/s. Roshan Steel India engaged in the business of trading in ferrous and non-ferrous metals. We find that assessee had made certain purchases from certain suppliers totalling to Rs.80,93,141/- whose names appeared in the list of havala dealers published by the Maharashtra Sales Tax Department and said information was passed on to Income Tax Investigation Wing which ultimately triggered the reopening of the assessment in the case of the assessee.

3.1. We find that the ld. AO took due cognizance of the fact of various documents submitted by the assessee to support aforesaid purchases made to the tune of Rs.80,93,141/- and ultimately concluded that the purchases were indeed actually made by the assessee from grey market and sales were also made and disclosed out of such purchases. Accordingly, only the profit element could be brought to tax thereon. The ld. AO estimated the profit element embedded in such purchases at 12.5% and made an addition of Rs.10,11,643/- in the assessment. We find that the ld. CIT(A) upheld the estimated percentage of 12.5% as profit element but granted partial relief to the assessee by directing the ld. AO to reduce the gross profit already declared by the assessee in the return of income from the aforesaid estimated profit of 12.5%. Aggrieved by this action, the revenue is in appeal before us. Both the parties before

In the result, appeal of the revenue is dismissed.