← All Phrases

“profit element”

DisallowancesSection 69CSection 69C5,654 judgments

The decision most relied on for profit element is CIT v. President Industries (258 ITR 654), cited in 471 judgments on BharatTax.

Leading authorities on profit element

CIT v. President Industries
258 ITR 654 · 2002 · High Court
471
citing judgments

When books of account are rejected and unaccounted sales or receipts are discovered, the income addition is restricted to the net profit element embedded in these undisclosed transactions, not the entire sale proceeds or receipts, especially if corresponding purchases are not proven to be outside the books.

Sanjay Oilcake Industries v. CIT
316 ITR 274 · 2009 · High Court
460
citing judgments

In cases of alleged bogus or unverifiable purchases, rather than disallowing the entire purchase value, a reasonable profit element or a proportionate percentage of the purchases should be added back to the assessee's income.

CIT v. Siemens Aktiongesellschaft
310 ITR 320 · 2009 · High Court
259
citing judgments

Reimbursements of actual expenses without any profit element are not taxable income. Additionally, mere amendments to the Income-tax Act do not override the provisions of Double Taxation Avoidance Agreements (DTAAs).

CIT v. Vijay M. Mistry Construction Ltd.
355 ITR 498 · 2013 · High Court
252
citing judgments

In cases of alleged bogus or hawala purchases where the existence of transactions is not entirely denied, only the profit element embedded in such purchases, and not the entire purchase price, can be added to the assessee's income. The focus is on determining a reasonable profit percentage for such additions.

CIT v. Balchand Ajit Kumar
263 ITR 610 · 2003 · High Court
212
citing judgments

When making an addition for unaccounted receipts, on-money, or non-genuine purchases/sales, the addition should be restricted to the estimated profit element embedded in such transactions, rather than the entire gross amount, particularly when evidence of corresponding expenditure is incomplete. This estimation often involves applying a net profit rate.

CIT v. Gurubachhan Singh J. Juneja
302 ITR 63 · 2008 · High Court
147
citing judgments

When unaccounted receipts or suppressed sales are detected and books of account are rejected under Section 145(3), additions to income must be restricted to the profit element embedded in such transactions, not the entire transaction value. This profit element is to be estimated by considering the assessee's regular profit ratio as per books of account.

Vijay Trading Co. v. ITO
388 ITR 377 · 2016 · High Court
119
citing judgments

When purchases are found bogus, only the profit element embedded therein, and not the entire purchase value, can be added to the assessee's income.

NK Proteins Ltd. v. DCIT
292 CTR 354 · 2017 · Supreme Court
115
citing judgments

When purchases are unverifiable or alleged to be bogus, only the profit element embedded in such transactions is taxable, not the entire purchase amount; the onus lies on the assessee to prove the genuineness of the transactions.

Judgments citing profit element

Prithviraj G. Jain, Mumbai vs. ITO 19(2)(5), Mumbai

In the result, appeals of the assessee are partly allowed

ITA 1805/MUM/2017[2010-11]Status: DisposedITAT Mumbai03 Nov 2017AY 2010-11

Bench: Shri C.N. Prasad, Hon'Ble & Shri G. Manjunathan, Hon'Ble

For Appellant: Shri Rajiv KhandelwalFor Respondent: Shri M.V. Rajguru
Section 133(6)Section 143(1)Section 143(3)Section 145(3)Section 147

3057/MUM/2017 Prithviraj G.Jain as according to the Assessing Officer the entries and the Books of Accounts cannot be relied on. He estimated the profit element in the purchases at 12.5% of the said purchases from those parties and was treated as suspicious purchases and added to the income ... 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

Prithviraj G. Jain, Mumbai vs. ITO 19(2)(5), Mumbai

In the result, appeals of the assessee are partly allowed

ITA 911/MUM/2016[2009-10]Status: HeardITAT Mumbai03 Nov 2017AY 2009-10

Bench: Shri C.N. Prasad, Hon'Ble & Shri G. Manjunathan, Hon'Ble

For Appellant: Shri Rajiv KhandelwalFor Respondent: Shri M.V. Rajguru
Section 133(6)Section 143(1)Section 143(3)Section 145(3)Section 147

3057/MUM/2017 Prithviraj G.Jain as according to the Assessing Officer the entries and the Books of Accounts cannot be relied on. He estimated the profit element in the purchases at 12.5% of the said purchases from those parties and was treated as suspicious purchases and added to the income ... 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

Amit Agarwal, Navi Mumbai vs. ITO RG 22(3)(1), Navi Mumbai

In the result, assessee’s appeal is partly allowed for statistical purposes

ITA 5867/MUM/2015[2009-10]Status: DisposedITAT Mumbai03 Nov 2017AY 2009-10

Bench: Shri G.S. Pannu & Shri Saktijit Dey

For Appellant: Shri Manish V. ShahFor Respondent: Shri Rajesh Kumar Yadav
Section 133(6)Section 143(1)Section 147

documentary evidences, however, he held that the entire amount representing such purchases cannot be added as the income of the assessee, but, only the profit element embedded in such purchases can be treated as assessee’s income. Accordingly, applying the gross profit rate shown by the assessee at 5.6%, learned

DCIT 28(3), Navi Mumbai vs. Sunil Khanna, Navi Mumbai

In the result, the Revenue’s appeal and the assessee’s cross objection stands dismissed

ITA 276/MUM/2015[2011-12]Status: DisposedITAT Mumbai03 Nov 2017AY 2011-12

Bench: Shri Rajendra, Am & Shri Sandeep Gosain, Jm आयकर अपील सं./I.T.A. No. 276/Mum/2015 (धििाारण वर्ा / Assessment Year: 2011-12) Dy. Cit-28(3), Sunil H. Khanna, बिाम/ 3Rd Floor Tower No. 6, Vashi Railway 311, A-Wing, Arneja Corner, Station Complex, Vashi, Sector-17, Vashi, Vs. Navi Mumbai-400 703 Navi Mumbai-400 703 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. Afhpk 2599 E (Revenue) : (Assessee)

For Appellant: Shri Prakash PanditFor Respondent: Shri v. Justin
Section 143(1)

case and in law, the ld. CIT(A) erred in directing the A.O. to disallow 10% of the alleged bogus purchases, being the profit element from the purchases made from the parties. 7. Ground nos. 1 and 2 raised by the Revenue are interrelated and interconnected and relates to challenging ... reduce the profits. 11 ITA No. 276/M/15 & CO No.131/M/16 (A.Y. 2011-12) Sunil H. Khanna Therefore what can be taxed in such transactions is profit element embedded and not the entire purchases. 2.21 In the case of CIT-1 vs. Simit P. Sheth, JTA no. 553 of 2012, order dated

Shantilal J. Shah, Bangalore vs. DCIT, Bangalore

In the result, the assessee’s appeals for the assessment years

ITA 355/BANG/2014[2011-12]Status: DisposedITAT Bangalore03 Nov 2017AY 2011-12

Bench: Shri George George K, Jm & Shri Jason P.Boaz, Am

For Appellant: Shri H.N.Khincha, CAFor Respondent: Shri Ajit Kumar Varma, CIT
Section 132Section 132(4)Section 139Section 143(3)Section 153A

justified in treating the same as ‘on money’ for sale of flats. 9. The learned AR has also contended that the only net profit element in undisclosed sale is to be taxed. This contention of the learned Counsel is devoid of any merit since the assessee is unable to prove

Shantilal J. Shah, Bangalore vs. DCIT, Bangalore

In the result, the assessee’s appeals for the assessment years

ITA 354/BANG/2014[2010-11]Status: DisposedITAT Bangalore03 Nov 2017AY 2010-11

Bench: Shri George George K, Jm & Shri Jason P.Boaz, Am

For Appellant: Shri H.N.Khincha, CAFor Respondent: Shri Ajit Kumar Varma, CIT
Section 132Section 132(4)Section 139Section 143(3)Section 153A

justified in treating the same as ‘on money’ for sale of flats. 9. The learned AR has also contended that the only net profit element in undisclosed sale is to be taxed. This contention of the learned Counsel is devoid of any merit since the assessee is unable to prove

Shantilal J. Shah, Bangalore vs. DCIT, Bangalore

In the result, the assessee’s appeals for the assessment years

ITA 353/BANG/2014[2009-10]Status: DisposedITAT Bangalore03 Nov 2017AY 2009-10

Bench: Shri George George K, Jm & Shri Jason P.Boaz, Am

For Appellant: Shri H.N.Khincha, CAFor Respondent: Shri Ajit Kumar Varma, CIT
Section 132Section 132(4)Section 139Section 143(3)Section 153A

justified in treating the same as ‘on money’ for sale of flats. 9. The learned AR has also contended that the only net profit element in undisclosed sale is to be taxed. This contention of the learned Counsel is devoid of any merit since the assessee is unable to prove

Shantilal J. Shah, Bangalore vs. DCIT, Bangalore

In the result, the assessee’s appeals for the assessment years

ITA 352/BANG/2014[2008-09]Status: DisposedITAT Bangalore03 Nov 2017AY 2008-09

Bench: Shri George George K, Jm & Shri Jason P.Boaz, Am

For Appellant: Shri H.N.Khincha, CAFor Respondent: Shri Ajit Kumar Varma, CIT
Section 132Section 132(4)Section 139Section 143(3)Section 153A

justified in treating the same as ‘on money’ for sale of flats. 9. The learned AR has also contended that the only net profit element in undisclosed sale is to be taxed. This contention of the learned Counsel is devoid of any merit since the assessee is unable to prove

Premji Manshi Gala, Mumbai vs. Income Tax Officer, Ward 3(2), Mumbai

In the result, both the appeals of the assessee are partly allowed

ITA 5521/MUM/2017[2009-10]Status: DisposedITAT Mumbai02 Nov 2017AY 2009-10

Bench: Shri B.R. Baskaran (Am)

Section 148

submitted that the VAT rates applicable to the products dealt by the assessee are 5% and 12.50%. Hence, in my view, the profit element may be estimated in between the two rates as it would take care of savings made by way of VAT tax plus the discount

Shree Chemtech Marketing P.Ltd, Mumbai vs. ITO 15(3)(3), Mumbai

In the result, the appeal of the assessee is dismissed

ITA 5430/MUM/2017[2011-12]Status: DisposedITAT Mumbai02 Nov 2017AY 2011-12

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 5430/Mum/2017 (Assessment Year 2011-12)

Section 148

only. Hence the AO has taken the view that the assessee would have made profit from such purchases and accordingly he has estimated the profit element embedded in such purchases at 12.50% of the value of purchases. In my view, mere submission of purchase bills and payment details would ... cannot be said that the assessee has proved the purchases beyond doubt. Under these set of facts, the AO was justified in estimating the profit element embedded in the purchases, which he has estimated at 12.50%. I notice that the Ld CIT(A) confirmed the addition by following his order

Naitik Gems, Mumbai vs. Income Tax Officer-32(2)(4), Mumbai

In the result, the appeal filed by the assessee is dismissed

ITA 4760/MUM/2017[2009-10]Status: DisposedITAT Mumbai02 Nov 2017AY 2009-10

Bench: Shri B.R. Baskaran (Am)

Section 148

purchase party is doubted but the genuineness of purchase on a whole cannot be doubted, the courts have taken a view that only the profit element embedded in such a transaction could be taxed. This is a .fairly accepted principle and the same would also apply in this case. However ... assessee .from the above concern and claimed as purchase expenses in his profit and loss account are not genuine. And there is profit element embedded in these transactions wherein the purchases have been made from other entities not from the claimed entity i.e. aforesaid hawala dealers. 10. Now the question

Hardik Jitendra Shah, Mumbai vs. Income Tax Officer-32(1)(5), Mumbai

In the result, the appeal of the assessee is treated as partly allowed

ITA 4684/MUM/2017[2009-10]Status: DisposedITAT Mumbai02 Nov 2017AY 2009-10

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 4684/Mum/2017 (Assessment Year 2009-10)

Section 148

Rs.77.88 lakhs, the AO reopened the assessment of this year by issuing notice u/s 148 of the Act. The assessing officer estimated the profit element embedded in the above said suspicious purchases at 30% of its value 2 Mr. Hardik Jitendra Shah and added the same to the total income

ACIT 1(3)(1), Mumbai vs. Sovika Chemicals Pvt. Ltd., Mumbai

The appeal of the Revenue is dismissed

ITA 5096/MUM/2016[2012-13]Status: DisposedITAT Mumbai02 Nov 2017AY 2012-13

Bench: Shri Joginder Singh & Shri Rajesh Kumarassessment Year: 2012-13 Acit-1(3)(1), M/S Sovika Chemicals Pvt. Room No.540, 5Th Floor, Ltd. बनाम/ Aayakar Bhavan, B/2, Parekh Mahal, 80, Vs. M.K. Road, Veer Nariman Road, Mumbai-400020 Churchgate, Mumbai-400020 (राज"व /Revenue) ("नधा"रती /Assessee) Pan. No.Aaacs5390N

Section 69C

sell the finished goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. This was the view of this court in the case of Sanjay Oilcake Industries

DCIT Cir. 13(1)(2), Mumbai vs. P-Cube Construction Pvt. Ltd., Mumbai

The appeal of the Revenue is dismissed

ITA 5019/MUM/2016[2009-10]Status: DisposedITAT Mumbai02 Nov 2017AY 2009-10

Bench: Shri Joginder Singh & Shri Rajesh Kumarassessment Year: 2009-10 Dcit, M/S P-Cube Construction Circle-13(1)(2), Private Ltd. बनाम/ Room No.218, 02Nd Floor, 1/A/101, Umiya Nagar, Vs. Aayakar Bhavan, M. K. Road, Visheshwar Nagar Road, Mumbai-400020 Off Aarey Road, Goregaon (East), Mumbai-400054 (राज"व /Revenue) ("नधा"रती /Assessee) Pan. No.Aadcp9320N

Section 69C

sell the finished goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. This was the view of this court in the case of Sanjay Oilcake Industries

DCIT CC 6(4), Mumbai vs. J Kumar Infrapojects Ltd, Mumbai

In the result, all the appeals of the assessee are partly allowed and the appeals of the revenue are dismissed

ITA 4231/MUM/2016[2008-09]Status: DisposedITAT Mumbai02 Nov 2017AY 2008-09

Bench: S/Shri B.R. Baskaran (Am) & Amarjit Singh (Jm)

Section 133ASection 143(3)

vital question while considering whether the entire amount of purchases should be added back to the income of the assessee or only the profit element embedded therein was to ascertain whether the purchases themselves were completely bogus and non-existent or that the purchases were actually made but not from ... parties other than those mentioned in the books of account. 7. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. So much is clear by the decision of this court. In particular

ACIT, Cir.-7(1)(1), Mumbai vs. Gopani Metal Industries Pvt. Ltd., Mumbai

In the result, appeal filed by the revenue for assessment year 2011-12 is partly allowed

ITA 2943/MUM/2016[2011-12]Status: DisposedITAT Mumbai02 Nov 2017AY 2011-12

Bench: Shri Rajendra, Am & Shri Ram Lal Negi, Jm आिकर अपील सं./Ita No. 2943/Mum/2016 (धििाारण वर्ा / Assessment Year: 2011-12) The Asst. Commissioner Of Vs. M/S Gopani Metal Industries Income Tax, Circle- 7(1)-1, Pvt. Ltd., Room No. 573, 5Th Floor, 37, Llyods House, Aayakar Bhavan, Baroda Street, M.K. Road, Carnac Bunder, Mumbai - 400020 Mumbai - 400009 स्थािी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabcb1392G (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) राजस्व की ओर से / Revenue By : Sh. Saurabh Kumar Rai (Dr) यनर्ावररती की ओर से /Assessee By : Sh. Prakash Jotwani (Ar) सुनर्ाई की तारीख / Date Of Hearing : 03/08/2017 घोषणा की तारीख/Date Of Pronouncement: 02/11/2017

For Appellant: Sh. Prakash Jotwani (AR)For Respondent: Sh. Saurabh Kumar Rai (DR)
Section 133Section 143

rightly made the addition of entire amount in question or the AO was required to make addition taking into consideration, the profit element embedded in the transaction. 9. While upholding the decision of Mumbai Tribunal the Hon’ble Bombay High Court In CIT Vs. Nikunj Eximp Enterprises Pvt. Ltd. (supra ... upheld the decision of the Tribunal and sustained the addition 12.5% of the total bogus purchases holding that only profit element embedded in such purchases can be added to income of the assessee. In the light of the aforesaid 5 Assessment Year: 2011-12 judgment, we set aside the impugned

Niranjan B. Majani, Mumbai vs. Income Tax Officer - 24(3)-2, Mumbai

Appeal stands dismissed

ITA 5025/MUM/2017[2009-10]Status: DisposedITAT Mumbai01 Nov 2017AY 2009-10

Bench: Shri D.T. Garasia, Jm & Shri Manoj Kumar Aggarwal, Am आयकर अपील सं./I.T.A. No.5025/Mum/2017 (िनधा"रण वष" / Assessment Year: 2009-10) Niranjan B Majani Income Tax Officer 24(3)(2) B/209, Amarnath Apartment 515, Piramal Chambers बनाम/ Sir M.V.Road, Lalbaugh, Parel Vs. 3Rd Gundavali, Andheri(E) Mumbai- 400 013 Mumbai-400 069 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Ahwpm-1549-H (अपीलाथ" /Appellant) (""थ" / Respondent) :

For Appellant: Ashwin S. Chhag, Ld.ARFor Respondent: Suman Kumar, Ld. DR
Section 133(6)Section 143(1)Section 143(2)Section 143(3)Section 147Section 148

Therefore, in such a situation, the addition, which ITA.No.5025/Mum/2017 Niranjan B Majani Assessment Year-2009-10 could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue

Aliasgar F. Magar, Mumbai vs. Income Tax Officer-20(1)(1), Mumbai

In the result, the appeal of the assessee is dismissed

ITA 4604/MUM/2017[2009-10]Status: DisposedITAT Mumbai01 Nov 2017AY 2009-10

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 4604/Mum/2017 (Assessment Year 2009-10)

Section 133(6)Section 148

only. Hence the AO has taken the view that the assessee would have made profit from such purchases and accordingly he has estimated the profit element embedded in such purchases at 12.50% of the value of purchases. In my view, mere submission of purchase bills and payment details would ... cannot be said that the assessee has proved the purchases beyond doubt. Under these set of facts, the AO was justified in estimating the profit element embedded in the purchases, which he has estimated at 12.50%. However, the Ld CIT(A) has restricted the same to the rate of gross

Reliant Pipes & Tubes P. Ltd, Mumbai vs. ITO 5(3)(1), Mumbai

In the result, this appeal filed by the assessee stands dismissed

ITA 3383/MUM/2017[2011-12]Status: DisposedITAT Mumbai01 Nov 2017AY 2011-12

Bench: Shri Shamim Yahyaआयकर अपील सं./I.T.A. No.3383/Mum/2017 ("नधा"रण वष" / Assessment Year: 2011-12) Reliant Pipes & Tubes Pvt. Ltd. Ito-5(3)(1), बनाम/ 3/5, Ground Floor, Sakar Bhavan, Aayakar Bhawan, 6Th Khetwadi Lane, Mumbai-400 020 Vs. Mumbai-400 004 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aadcr 8444 F (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : None ""यथ" क" ओर से/Respondent By : Ms. Hemalatha सुनवाई क" तार"ख / : 31.08.2017 Date Of Hearing घोषणा क" तार"ख / : 01.11.2017 Date Of Pronouncement आदेश / O R D E R Per Shamim Yahya, A. M.: This Appeal By The Assessee Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-10, Mumbai (‘Cit(A)’ For Short) Dated 20.01.2017 & Pertains To The Assessment Year (A.Y.) 2011-12. 2. The Grounds Of Appeal Read As Under:

For Appellant: NoneFor Respondent: Ms. Hemalatha
Section 133(6)Section 143(3)

learned Commissioner of Income Tax (Appeal)-10 erred in confirming addition of Rs.15,05,155/- out of Rs.28,94,528/- on estimated profit element on treating the genuine purchases of Rs.2,31,56,224/- as non-genuine purchases as the said purchases made considered as bogus from the impugned

Shreyans Metal (India), Mumbai vs. ITO RG 19(3)(3), Mumbai

Appeal stands partly allowed

ITA 5517/MUM/2016[2009-10]Status: DisposedITAT Mumbai01 Nov 2017AY 2009-10

Bench: Shri D.T. Garasia, Jm & Shri Manoj Kumar Aggarwal, Am आयकर अपील सं./I.T.A. No.5517/Mum/2016 (िनधा"रण वष" / Assessment Year: 2009-10) Shreyans Metal (India) Income Tax Officer Shop No.1, Ground Floor Range 19(3)(3) बनाम/ Mali Bhuvan Matru Mandir,2Nd Floor Vs. 8Th Khetwadi Lane Tardeo Road Mumbai-400 004 Mumbai- 400 007 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aanfs-1907-R (अपीलाथ" /Appellant) (""थ" / Respondent) :

For Appellant: Nitesh Joshi ,Ld.ARFor Respondent: V. Jenardhanan, Ld. Sr.DR
Section 133(6)Section 143(1)Section 143(2)Section 143(3)Section 147Section 148

back, which cast serious doubt on assessee’s claim. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue