“profit element”

ITO 12(3)(3), Mumbai vs. Mangalam Infra Development Pvt. Ltd., Mumbai

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

Bench: Shri Rajendra, Am & Shri Ram Lal Negi, Jm आिकर अपील सं./Ita No. 6106/Mum/2016 (धििाारण वर्ा / Assessment Year: 2011-12) The Ito-12(3)(3), Vs. M/S Mangalam Infra Room No. 224, Development Pvt. Ltd., 2Nd Floor, Aayakar Bhavan, 16, Ground Floor, M.K. Road, Shreeji Shopping Centre, Mumbai - 400020 M.G. Road, Borivali (East), Mumbai - 400066 स्थािी लेखा सं./जीआइआर सं./Pan/Gir No. : Aafcm3854Q (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) & प्रत्याक्षेप सं /Co No. 206/Mum/2017 (धििाारण वर्ा / Assessment Year: 2011-12) M/S Mangalam Infra Vs. The Ito-12(3)(3), Development Pvt. Ltd., Room No. 224, 16, Ground Floor, 2Nd Floor, Aayakar Bhavan, Shreeji Shopping Centre, M.K. Road, Mumbai - 400020 M.G. Road, Borivali (East), Mumbai - 400066 स्थािी लेखा सं./जीआइआर सं./Pan/Gir No. : Aafcm3854Q (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent)

upheld the decision of the Tribunal and sustained the addition of 12.5% of the total bogus purchases holding that only profit element embedded in such purchases can be added to the income of the assessee. 5 ITA No. 6106/MUM/2016 & CO No. 206/Mum/2017 Assessment Year: 2011-12 10. We further notice

ITO 31(2)(3), Mumbai vs. Bharatkumar Nagraj Jain, Mumbai

Bench: Shri Joginder Singh & Shri N.K. Pradhanassessment Years: 2009-10 Income Tax Officer-31(2)(3), Mr. Bharatkumar Nagraj (Erstwhile Income Tax Officer- Jain, बनाम/ 24(3)(4), Proprietor Of N.R. Vs. R. No.705, C-11, 7Th Floor, Computech, 23/11, Pratyakshkar Bhavan, Jawahar Nagar, B.K.C. Bandra (East), Goregaon (East), Mumbai-400051 Mumbai-400063 (राज"व /Revenue) ("नधा"रती /Assessee) P.A. No. Acwpj1720C C.O. No.07/Mum/2017 (Arising Out Of Ita No.2608/Mum/2015) Assessment Years: 2009-10 Mr. Bharatkumar Nagraj Jain, Income Tax Officer-31(2)(3), Proprietor Of N.R. Computech, (Erstwhile Income Tax बनाम/ 23/11, Jawahar Nagar, Officer-24(3)(4), Vs. Goregaon (East), R. No.705, C-11, 7Th Floor, Mumbai-400063 Pratyakshkar Bhavan, B.K.C. Bandra (East), Mumbai-400051 ("नधा"रती /Assessee) (राज"व /Revenue) P.A. No. Acwpj1720C C.O. No.06 To 08/Mum/2017 Bharat Kumar Nagraj Jain Assessment Years: 2010-11 Income Tax Officer-31(2)(3), Mr. Bharatkumar Nagraj (Erstwhile Income Tax Officer- Jain, बनाम/ 24(3)(4), Proprietor Of N.R. Vs. R. No.705, C-11, 7Th Floor, Computech, 23/11, Pratyakshkar Bhavan, Jawahar Nagar, B.K.C. Bandra (East), Goregaon (East), Mumbai-400051 Mumbai-400063 (राज"व /Revenue) ("नधा"रती /Assessee) P.A. No. Acwpj1720C

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

Shivprakash Sharma, Mumbai vs. ITO 25(1)(2), Mumbai

In the result, the appeal filed by the assessee is partly allowed

Bench: Shri B.R. Baskaran (Am)

assessee has reconciled 3 Shri Shivprakash Sharma the purchase and sales, I am of the view that the tax authorities have rightly added the profit element embedded in the purchases, as goods cannot be sold without making corresponding purchases. Since the impugned suppliers have been named as hawala dealers

ITO WD 3(4), Kalyan vs. Haresh M Valiya, Dombivali

Accordingly this ground raised by the revenue is partly allowed

Bench: Shri Shamim Yahya, Am & Shri Sandeep Gosain, Jm आयकरअपीलसं./ I.T.A. No. 3515/Mum/2017, (निर्धारणवर्ा / Assessment Year: 2011-12)

Cake Industries (2009) 316 ITR 274 (Guj) (1C) and taking into consideration the facts of the present case, and to account for the profit element embedded in these purchase transactions to factorize profit earned by assessee against purchase of material in the grey market and undue benefit of VAT against

ITO 31(1)(3), Mumbai vs. Brahmdev Dudhnath Shukla, Mumbai

In the result, both the appeals of the revenue are dismissed

Bench: Shri B.R. Baskaran (Am)

proved the transportation. Since the assessee has correlated purchases with sales, in my view, the Ld CIT(A) was justified in holding that the profit element embedded in the said purchases alone should be taxed. The Ld CIT(A) has estimated the same at the same rate

Ashok Mehta HUF, Mumbai vs. ITO 22(1)(2), Mumbai

In the result, the appeal of the assessee is dismissed

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 3040/Mum/2017 (Assessment Year 2011-12)

assessee could correlate the purchases with sales, the assessing officer added 12.50% of the value of purchases made from the suspicious dealers as profit element embedded in such purchases. The Ld CIT(A) also confirmed the same and still aggrieved, the assessee has filed this appeal. 2 Shri Ashok Mehta ... maintained stock register and has proved that the purchased goods have been sold. Hence 3 Shri Ashok Mehta (HUF) the AO has estimated the profit element embedded in such purchases. In my view, mere submission of purchase bills and payment details would not be sufficient, particularly when the suppliers have

Microplus Polymes P.Ltd, Mumbai vs. DCIT Cir 2(2), Mumbai

In the result, appeals of revenue are dismissed whereas appeals of the assessee are allowed in part

Bench: Shri R.C.Sharma, Am M/S. Microplus Polymers Pvt. Ltd., Vs. Dcit Cir 2(2), 40/42, Modistreet R.No.545, R.No.316, Fort, Aayakar Bhavan Mumbai – 400 001 M.K.Road, Mumbai – 400 020 Pan/Gir No. Aaecm3574E Appellant) .. Respondent) The Asst. Commissioner Of Income Vs. M/S. Microplus Polymers Pvt. Ltd., Tax, Circle-2(2)(2), 40/42, Modistreet Room No.545, 5Th Floor, R.No.316, Fort, Aayakar Bhavan, M.K.Road Mumbai – 400 001 Churchgate, Mumbai – 400 020 Pan/Gir No. Aaecm3574E Appellant) .. Respondent) Income Tax Officer – 2(2)(3), Vs. M/S. Microplus Polymers Pvt. Ltd., Aayakar Bhavan, R.No.542, 40/42, Modistreet M.K.Road, Mumbai R.No.316, Fort, Mumbai – 400 001 Pan/Gir No. Aaecm3574E Appellant) Respondent) .. M/S. Microplus Polymers Pvt. Ltd., Vs. Income Tax Officer – 2(2)(3), 40/42, Modistreet Aayakar Bhavan, R.No.542, R.No.316, Fort, M.K.Road, Mumbai Mumbai – 400 001 Pan/Gir No. Aaecm3574E Appellant) .. Respondent)

case and in Law, the Ld. CIT(A) was right in accepting the purchase from bogus vendors as genuine leading to assessment of profit element only when the onus to establish the genuineness of such purchases were not established as per law." (IV) For these and ether grounds that

Salim Ebrahim Petiwala, Mumbai vs. ITO 15(1)(1), Mumbai

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

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 1866/Mum/2017 (Assessment Year 2010-11)

himself has observed that the assessee might have purchased goods from some other sources, in which case, it may be proper to assess the profit element embedded in such purchases. Accordingly, I am of the view that the addition may be restricted to 12.50% of the value of impugned purchases

Asst CIT 9(2)(2), Mumbai vs. Evergreen Engineering Co. P.Ltd, Mumbai

In the result, appeal of the Revenue is dismissed

Bench: Shri C.N. Prasad, Hon'Ble & Shri N.K. Pradhan, Hon'Bleacit -9(2)(2) V. M/S. Evergreen Engineering Co. Pvt. Ltd. Room No.665A, 6Th Floor 35B, Mahal Industrial Estate, Aayakar Bhavan, Mahakali Caves Road, M.K.Road, Andheri (E) Mumbai-400 020 Mumbai – 400 093

Court held that since the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded in such purchases could be added to the assessee's income and as such no question of law arose in such estimation. While ... laws cited (supra), I estimate the suppressed profit to the extent of 12.5% of the purchases made from the bogus entities, as the suppressed profit element embedded in such 5 M/s. Evergreen Engineering Co.P.Ltd. purchases. This estimation is in addition to the GP shown by the appellant. Accordingly, this ground

DCIT 13(1)(2), Mumbai vs. Panchavati Valves & Flanges P.Ltd, Mumbai

In the result, appeal of the Revenue is dismissed

Bench: Shri C.N. Prasad, Hon'Ble & Shri N.K. Pradhan, Hon'Bledcit, Circle – 13(1)(2), 2Nd Floor, V. M/S Panchavati Valves & Flanges Pvt. Ltd.; Room No.218, Sumit Samarth Arcade, Aayakar Bhavan, M.K.Road, B-Wing, 503-A & B, 5Th Floor, Mumbai-400 020 Behind Jain Mandir, Aarey Road, Goregaon (W) Mumbai – 400062

Simit P. Sheth (2013) 219 Taxman 85 (Guj) has held that in such facts and circumstances, not entire purchase price but only profit element embedded in such purchases can be added. The finding of the Hon'ble Gujarat High Court in the case of CIT vs. Simit P. Seth ... 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

DCIT Cir 11(2)(2), Mumbai vs. Sukan Engineering P.Ltd, Mumbai

Bench: Shri Rajendra, Am & Shri Sandeep Gosain, Jm आमकय अऩीर सं./I.T.A. No. 6235 & 6236/Mum/2016 (निर्धारण वषा / Assessment Year: 2009-10 & 2011-12)

decision of honsble Gujarat High Court in case of DCIT Vs. Panna Corporation (supra) where it is held that not complete purchases, but, profit element has to be added back. It is concluded that 1% of gross profit on the purchase of Rs. 90,90,785/- is further added back

ITO 32(1)(3), Mumbai vs. Balwant A. Shah, Mumbai

In the result, Revenue’s appeal is dismissed

Bench: Shri C.N. Prasad, Hon'Ble & Shri Manoj Kumar Aggarwal, Hon'Bleincome Tax Officer – 32(1)(3), V. Shri Balwant A. Shah, Room No.210, C-11, 2Nd Floor, A-9, Sabarmati Chs, Daulat Nagar, Pratyakshakar Bhavan, Bandra Road No.10, Borivali (West), Kurla Complex, Bandra(E) Mumbai – 66 Mumbai – 51 Pan: Anfps 9596 M (Appellant) (Respondent) Assessee By : None Department By : Shri Arju Garodia

submissions of the assessee and also the findings of the Assessing Officer and relying on the decisions of various High Courts computed the profit element on such purchases of ₹.96,26,713/- @13.28% being average Gross Profit rate declared by the assessee and restricted the addition ... treated as bogus purchases. 6. The Ld.CIT(A) considering the submissions and the findings of the Assessing Officer concluded that only the profit element embedded in such purchases should be added as income of the assessee but not the entire purchases and the Ld.CIT(A) estimated the Gross Profit rate

Reafiqulla Niamat Khan, Mumbai vs. ITO 20(3)(1), Mumbai

In the result, the appeals filed by these assessees are dismissed

Bench: Shri B.R. Baskaran (Am)

Gujarat High Court in the case of Simit P Shah (356 ITR 451) and also some other decisions, the AO took the view that profit element involved in the purchases should be brought to tax. Accordingly he assessed 12.50% of the value of suspicious purchases as income of the assessee

Mody Interiors P.Ltd, Mumbai vs. Asst CIT 16(3), Mumbai

Bench: Shri R C Sharma, Am & Shri Sandeep Gosain, Jm

when total sales is accepted by the AO, he could not have questioned the very basis of purchases in entire purchases but only the profit element embedded in such purchases can be added as income of the assessee. Accordingly, Hon'ble High Court allowed the order of Tribunal estimating ... present case also, AO had accepted the total sales of the appellant, hence in view of the above Gujarat High Court decision, only profit element embedded in the bogus purchases can be added to the total income of the appellant. Thus relying on the decision of Hon'ble Gujarat High

DCIT RG 9(1)(1), Mumbai vs. Abhisek Edifice P.Ltd, Mumbai

Bench: Shri Rajendra, Am & Shri Sandeep Gosain, Jm आयकरअपीलसं./ I.T.A. No. 6639/Mum/2016, (निर्धारणवर्ा / Assessment Year: 2011-12)

considering various judicial pronouncements as mentioned in its order, estimated the suppress profit @ 12.5% of the purchases made from bogus entities as the suppress profit element was embedded in such purchases. No new facts or contrary judgments have been brought on record before us in order to controvert or rebut

Hans Chemicals P.Ltd, Mumbai vs. ITO 9(2)(1), Mumbai

In the result, appeal of the revenue is dismissed whereas appeal of the assessee is allowed in part

Bench: Shri R.C.Sharma, Am & Shri Sandeep Gosain, Jm M/S. Hans Chemicals Pvt. Ltd., Vs. Ito 9(2)(1) 407, Panchsheel 2A Raheja Aayakar Bhavan Township L.S. Rajeka Cross Road Mumbai – 400 020 No.3, Malad (E), Mumbai – 400 097 Pan/Gir No. Aabch5433N Appellant) .. Respondent) Ito 12(2)(3) Vs. M/S. Hans Chemicals Pvt. Ltd., Aayakar Bhavan 407, Panchsheel 2A Raheja Mumbai – 400 020 Township L.S. Rajeka Cross Road No.3, Malad (E), Mumbai – 400 097 Pan/Gir No. Aabch5433N Appellant) .. Respondent) Assessee By Shri Neel Khandelwal Revenue By Shri V. Justin

purchased were used as input into assessee's product for sales which have been accepted by the department. 6.5 It is noted that only profit element is liable to tax in such cases as was held in the case of : 1. CIT vs. Bholanath Poly

Fagioli India P.Ltd, Mumbai vs. Asst CIT (Hq)(Jdl) CIT-14

In the result, appeal of the assessee is dismissed

Bench: Shri R.C.Sharma, Am & Shri Sandeep Gosain, Jm M/S. Fagioli India Pvt. Ltd., Vs. Asst. Cit (Hq) (Jdl) C?It- 104, A Wing, Delphi Building, 14 Hiranandani Business Park, Powai – 400076 Pan/Gir No.Aaacf6372K Appellant) .. Respondent)

alleged bogus purchases. The CIT(A) while confirming the addition to the extent of 12.5% observed that it will cover the profit element embedded in such purchases and subsequent consumption and sales thereon. 7. Nothing was placed before us by learned AR so as to persuade us to deviate from

Palamootil Verghese Mathew, Thane vs. DCIT, Cir-3, Thane

In the result, the appeal filed by the assessee is partly allowed

Bench: Shri Rajendra, Am & Shri Ram Lal Negi, Jm आिकर अपील सं./Ita No. 2902/Mum/2016 (धििाारण वर्ा / Assessment Year: 2009-10) Sh. Palamootil Verghese Mathew, Vs. The Dcit, Cir-3, 401, Wellington Ghodbunder Room No. 2, “B” Wing, Road, Hiranandani Estate, 6Th Floor, Ashar It Park, Thane (W)- 400607 Road No. 16Z, Wagle Estate, Thane (W) - 400604 स्थािी लेखा सं./जीआइआर सं./Pan/Gir No. : Agopm9419M (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) यनर्ावररती की ओर से /Assessee By : Sh. S.K. Ramani (Ar) राजस्व की ओर से /Revenue By : Sh. Saurabh Kumar Rai (Dr) सुनर्ाई की तारीख / Date Of Hearing : 02/08/2017 घोषणा की तारीख/Date Of Pronouncement: 18/09/2017 आदेश / O R D E R Per Ram Lal Negi, Jm This Appeal Has Been Filed By The Assessee Against Order Dated 26/02/2016 Passed By The Ld. Cit (A)-2, Thane, Pertaining To The Assessment Year 2009-10, Whereby The Ld. Cit (A) Has Partly Allowed The Appeal Preferred By The Assessee Against Assessment Order Passed U/S 144 Read With Section 147 Of The Of The Income Tax Act, 1961 (For Short ‘The Act’).

decision of the Tribunal and sustained the 4 Assessment Year: 2009-10 addition of 12.5% of the total bogus purchases holding that only profit element embedded in such purchases can be added to the income of the assessee. 8. So, in light of the facts of the case

DCIT Cen Cir 2(3), Mumbai vs. Sanjay Chemical India P. Ltd, Mumbai

The appeal of the revenue is dismissed

Bench: Shri Rajendra, Am & Shri Ravish Sood, Jm आयकर अपील सं./ I.T.A. No. 3721 & 3722/Mum/2017 (निर्धारण वर्ा / Assessment Year: 2009-10 & 2010-11) Dcit Central Circle-2(3), M/S Sanjay Chemical India R. No. 804, 8Th Floor, 5Th Floor, Kanmoor, House बिधम/ Old Cgo Building, M.K. Condominium, 281/287 Vs. Road, Mumbai-400 020 Narsi Natha Street Mumbai-400009 स्थायीलेखासं./जीआइआरसं./ Pan/Gir No. Aafcs2929E (अपीलाथी/Revenue) (प्रत्यथी / Assessee) :

from the parties declared as hawala parties by the sales tax department. The CIT(A) thus restricting the issue to the estimation of the profit element embedded in making of such bogus purchases by the assessee from the open/grey market, therein relying on the judgment of the Hon’ble High ... considered view that in the backdrop of the aforesaid facts, the issue involved in the present case boils down to the estimation of the profit element involved in the purchases claimed by the assessee to have been made from the aforesaid parties. We have given a thoughtful consideration