← 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

Refrigerated Deistributors P.Ltd, Mumbai vs. DCIT 2(3)(1), Mumbai

In the result, all the five appeals of assessee are partly allowed and appeal of Revenue is dismissed

ITA 2985/MUM/2016[2008-09]Status: DisposedITAT Mumbai13 Jan 2017AY 2008-09

Bench: Sri Mahavir Singh, Jm & Sri Rajesh Kumar, Am

Section 133(6)Section 143(3)Section 148

doubted the receipts from sale of goods. Thus, in the facts and circumstances of the case, the AO has rightly held that the profit element embedded and suppressed in the bogus purchases were to the extent of 25 per cent of such purchases. Hence, the gross profit addition ... assessee did produce cloth and sell finished goods, the entire amount covered under such purchase would not be subjected to tax and only the profit element embedded therein was to be taxed. While coming to the above conclusion, the Hon'ble High Court also relied on the decision

Refrigerated Deistributors P.Ltd, Mumbai vs. DCIT 2(3)(1), Mumbai

In the result, all the five appeals of assessee are partly allowed and appeal of Revenue is dismissed

ITA 2984/MUM/2016[2007-08]Status: DisposedITAT Mumbai13 Jan 2017AY 2007-08

Bench: Sri Mahavir Singh, Jm & Sri Rajesh Kumar, Am

Section 133(6)Section 143(3)Section 148

doubted the receipts from sale of goods. Thus, in the facts and circumstances of the case, the AO has rightly held that the profit element embedded and suppressed in the bogus purchases were to the extent of 25 per cent of such purchases. Hence, the gross profit addition ... assessee did produce cloth and sell finished goods, the entire amount covered under such purchase would not be subjected to tax and only the profit element embedded therein was to be taxed. While coming to the above conclusion, the Hon'ble High Court also relied on the decision

DCIT 2(3)(1), Mumbai vs. Refrigerated Distributors P.Ltd, Mumbai

In the result, all the five appeals of assessee are partly allowed and appeal of Revenue is dismissed

ITA 781/MUM/2015[2011-12]Status: DisposedITAT Mumbai13 Jan 2017AY 2011-12

Bench: Sri Mahavir Singh, Jm & Sri Rajesh Kumar, Am

Section 133(6)Section 143(3)Section 148

doubted the receipts from sale of goods. Thus, in the facts and circumstances of the case, the AO has rightly held that the profit element embedded and suppressed in the bogus purchases were to the extent of 25 per cent of such purchases. Hence, the gross profit addition ... assessee did produce cloth and sell finished goods, the entire amount covered under such purchase would not be subjected to tax and only the profit element embedded therein was to be taxed. While coming to the above conclusion, the Hon'ble High Court also relied on the decision

Asst CIT Cir 11(5) vs. Jsw Steel Ltd

In the result assessee’s appeal is partly allowed whereas revenue’s appeal is dismissed

ITA 930/BANG/2009[2004-05]Status: DisposedITAT Mumbai13 Jan 2017AY 2004-05

Bench: Shri Amit Shukla & Shri Ashwani Tanejaassessment Year: 2004-05

For Appellant: S/Shri Kanchan Kaushal & Hirali Desai, A.RFor Respondent: Shri Alok Johri, CIT D.R
Section 115JSection 139(1)Section 143(3)Section 234BSection 244A

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “J”, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA

Jsw Steel Ltd vs. Asst CIT Cir 11(5)

In the result assessee’s appeal is partly allowed whereas revenue’s appeal is dismissed

ITA 923/BANG/2009[2004-05]Status: DisposedITAT Mumbai13 Jan 2017AY 2004-05

Bench: Shri Amit Shukla & Shri Ashwani Tanejaassessment Year: 2004-05

For Appellant: S/Shri Kanchan Kaushal & Hirali Desai, A.RFor Respondent: Shri Alok Johri, CIT D.R
Section 115JSection 139(1)Section 143(3)Section 234BSection 244A

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “J”, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA

Jainex Fire & Safety Systems P. Ltd, Mumbai vs. ITO 6(3)(2), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 4627/MUM/2016[2009-10]Status: DisposedITAT Mumbai06 Jan 2017AY 2009-10

Bench: Shri G.S. Pannu: (A.Y : 2009-10)

For Appellant: Shri Satish R. ModyFor Respondent: Ms. Beena Santosh
Section 143(3)

Simit P Sheth, 356 ITR 451 (Guj) to point out that at best under these circumstances what is assessable is a reasonable profit element embedded in such transactions. The learned representative pointed out that assessee had no objection if 15% of the amount of such purchases is assessed instead

ACIT 29(1), Mumbai vs. Jagdish Thakkar, Mumbai

ITA 768/MUM/2015[2011-12]Status: DisposedITAT Mumbai06 Jan 2017AY 2011-12
For Appellant: Shri Dhaval ShahFor Respondent: Shri Asgar Zain
Section 133(6)Section 143Section 254(1)Section 69C

there was no question of disallowing the entire purchases made from certain alleged bogus party,that what could be taxed in such transaction was profit element embedded and not the entire purchases. Referring to the cases of Simit P Sheth and Bholenath Koli Feb Pvt. Ltd., he held that only ... profit element embedded in the purchases should be added to the income of the assessee. Finally,he directed the AO to disallow 10% of the alleged bogus purchases by Rs.31.57 lacs. 5.During the course of hearing before us, the Departmental Representative (DR) supported the order of the AO.The Authorised Representative

Dr Mahesh V Balsekar, Mumbai vs. Addl CIT RG 11(3) Now RG 16(3), Mumbai

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

ITA 2688/MUM/2015[2009-10]Status: DisposedITAT Mumbai03 Jan 2017AY 2009-10

Bench: Sri Mahavir Singh, Jm & Sri N.K. Pradhan, Am Dr. Mahesh V Balsekar Addl. Commissioner Of Income Tax 7, Sindhula Building, Naoroji Range-11(3) [Now Range-16(3)], Vs. Gamadia Road, Mahalaxmi, Mumbai Mumbai-400028 Pan No.Aespb7154E .. Appellant Respondent Assessee By .. Shri Satish Moody, Ar .. Shri M.V. Rajguru, Dr Revenue By Date Of Hearing .. 03-01-2017 .. Date Of Pronouncement 03-01-2017 O R D E R Per Mahavir Singh, Jm:

Section 131Section 143(3)(ii)

appellant has given vaccination treatment to around 9000 children and if the margin charged by the appellant is considered, the profit element in the vaccination charges would be around more than Rs.9,00,000I-, iv) further, the AO has observed that the receipts shown by the appellant are only Rs.37

ITO WD 1(1), Kalyan vs. Hasmukh Jagdish Visaria, Bhiwandi

In the result, the appeal filed by the revenue and the cross objection filed by the assessee are dismissed

ITA 7138/MUM/2014[2010-11]Status: DisposedITAT Mumbai03 Jan 2017AY 2010-11

Bench: Shri B.R. Baskaran (Am) & Shri Amit Shukla (Jm)

Section 133(6)

High Court in the case of CIT Vs. Simit P. Sheth (2013) 38 Taxman.com 385 (Gujarat), the learned CIT(A) took the view that profit element embedded in the purchases should be added to the total income. The learned CIT(A) estimated the profit element at 12%. Since the assessee

Sri Sitangshu Seth, Hooghly vs. ITO, WD-1(4), Kolkata, Hooghly

In the result, the appeal of the assessee for A

ITA 1124/KOL/2015[2008-2009]Status: DisposedITAT Kolkata28 Dec 2016AY 2008-2009
For Appellant: Shri S.M.Surana, Advocate and Shri D.K.SenFor Respondent: Shri Provash Roy, JCIT, Sr.DR
Section 133(6)

dated 20.03.2009 is conspicuous by its absence in purchase register. This suppression in purchase entails suppression in sale too. Only the profit element escaped taxation. (D) That purchase from Asahi Electronics Pvt. Ltd. for Rs. 5, 13,441.00(Rs. 6,99,406 - Rs.1,85,965.00), the appellant candidly admits ... although payment of the said purchase was made by A/c. payee cheque absolutely through Bank. As both purchase and sales are suppressed, the gross profit element may kindly be added in consonance with the principles of the natural justice. (E) That the discrepancy in opening balance

Amit Devani, Mumbai vs. ITO 22(1)(1), Navi Mumbai

In the result, appeals of the Assessee are partly allowed as indicated above

ITA 705/MUM/2016[2009-10]Status: DisposedITAT Mumbai28 Dec 2016AY 2009-10

Bench: Shri C.N.Prasad,Jm & Shri N. K. Pradhan, Am Income Tax Appeal Nos.705, 706 & 707/Mum/2016 (धििाारण वर्ा / Assessment Years : 2009-10, 2011-12 & 2010-11) Shri Amit Davani Vs. Ito 22 (1) (1) 601, Shri Nidhi Apartments Vashi Railway Station Cama Lane, Ghatkopar (W) Navi Mumbai Mumbai – 400 086 (प्रत्यर्थी / Respondent) (अपीलार्थी / Appellant) स्र्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Accpd7658R अपीलार्थी की ओर से /Appellant By : Shri Kirit S Sanghavi प्रत्यर्थी की ओर से /Revenue By : Shri Kailash Gaikwad सुनवाई की तारीख / Date Of Hearing : 05/10/2016 घोषणा की तारीख /Date Of Pronouncement : 28/12/2016 आदेश / O R D E R

For Appellant: Shri Kirit S SanghaviFor Respondent: Shri Kailash Gaikwad
Section 143(3)Section 147Section 69C

making purchases in grey market and in order to support such purchases, entries had been made to show from some bogus entities., and therefore profit element relating to these bogus purchases should be treated as Assessee’s income. Since the GP of the Assessee during the year is shown ... Sheth (365 ITR 451) has held that when purchases were made from parties other than those mentioned in the books of accounts, the profit element embedded in such purchases could be added to an assessee's income. Therefore, the profit element relating to these bogus purchases, shall be brought

Sha Tarachand Fojmal & Co., Mumbai vs. ITO WD 17(3)(3), Mumbai

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

ITA 2930/MUM/2016[2010-11]Status: DisposedITAT Mumbai23 Dec 2016AY 2010-11

Bench: Shri B.R. Baskaran & Shri Amit Shukla

For Appellant: Shri K.S. Chokshi & Smt. M.KFor Respondent: Shri M.C. Omi Ningshen, DR
Section 143(3)

explain the purchases. However, the entire purchase from these 2 parties cannot be added as bogus and what needs to be taxed is the profit element embedded in such transaction. The AO has disallowed 12.5% of these bogus purchases. I find that the appellant in his grounds of appeal

M/S Dhameja Mining, Sikkim vs. ITO, WD-2(4), Asansol

In the result, the appeal of assessee is allowed for statistical purposes

ITA 701/KOL/2015[2010-2011]Status: DisposedITAT Kolkata21 Dec 2016AY 2010-2011

Bench: : Shri M.Balaganesh & Shri S.S.Viswanethra Ravi

Section 143(2)Section 194Section 40Section 69A

assets in the form of business receivables stands substantiated. This is independent of whether it is already taken to profit and loss account and profit element of same is taxed or not. Hence, I uphold the addition made by the Assessing Officer. “ 17. The ld.AR submits that the contention

Sri Purna Chandra Maiti, Purba Medinipur vs. ACIT, Cir-Haldia, Purba Medinipur

In the result, the appeal of the assessee is dismissed

ITA 1442/KOL/2014[2009-2010]Status: DisposedITAT Kolkata21 Dec 2016AY 2009-2010

Bench: Shri P.M. Jagtap

Section 143(3)

Appeals), it was submitted by the assessee that the entire unaccounted receipts could not be treated as his unaccounted income and only the profit element thereof could be added in his hands. In this regard, it was brought to the notice of the ld. CIT(Appeals) by the assessee that ... keeping in view that the alternative plea raised by him to restrict the addition only to the extent of profit element at 3% would be accepted by the ld. CIT(Appeals). He has contended that one more opportunity may, therefore, be given to the assessee to explain/reconcile the difference

Prakash Manekji Shah, Thane vs. ITO WD 3(2), Thane

In the result, assessee’s appeal is partly allowed and Revenue’s appeal is dismissed

ITA 4974/MUM/2015[2009-10]Status: DisposedITAT Mumbai21 Dec 2016AY 2009-10

Bench: Shri Saktijit Dey & Shri Ramit Kochar

For Appellant: Shri Mandar VaidyaFor Respondent: Shri Vishwas Jadhav
Section 147

income of the assessee. In this regard, we agree 10 Shri Prakash Manekji Shah with the learned Commissioner (Appeals) that in such circumstances the profit element embedded in such bogus purchases has to be considered for addition. That being the case, it is necessary to examine what should

ITO 22(1)(3), Navi Mumbai vs. Khushboo Ali Khan, Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 6365/MUM/2014[2009-10]Status: DisposedITAT Mumbai19 Dec 2016AY 2009-10

Bench: Sri Mahavir Singh, Jm & Sri N.K. Pradhan, Am Income Tax Officer Khushboo Ali Khan -22(1)(3), Rook No.406, 4 Th Shop No.3, Opp. Shiv Pravha Floor, Tower No.6, Vashi Chs, Asalfa Village, Sakinaka Vs. Railway Station Complex, Vashi Link Road, Ghatkopar(W), Navi Mumbai-400703 Mumbai-400084 Pan No.Alepk0474B Appellant .. Respondent .. Shri. Rajesh Kumar Yadav, Dr Revenue By Assessee By .. Shri Jitendra Singh, Ar Date Of Hearing .. 19-12-2016 Date Of Pronouncement .. 19-12-2016 O R D E R Per Mahavir Singh, Jm:

Section 144

bank account, I am of the considered view that addition to the extent of 10% such deposit if sustained would take care of profit element embedded in the said deposits and meet both ends of justice. Therefore, A.O. is directed to restrict the addition to 10% of such deposit

ITO 16(2)(1), Mumbai vs. Ashwin Purshottam Bajaj, Mumbai

In the result , we dismiss both the appeal of the assessee as well of Revenue

ITA 5207/MUM/2014[2010-11]Status: DisposedITAT Mumbai14 Dec 2016AY 2010-11

Bench: Shri Mahavir Singh & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 4736/Mum/2014 ("नधा"रण वष" / Assessment Year : 2010-11) Shri Ashwin Purshotam The Ito – Ward 16(2)(1), बनाम/ Bajaj, Mumbai. V. C/O Shri Prakash Jhunjhunwala, Chartered Accountant, 5, Jolly Bhawan No. 2, 7 New Marine Lines, Churchgate, Mumbai – 400020. "थायी लेखा सं./Pan : Aacpb7522J .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Respondent: Shri Vikash Kumar Agarwal
Section 143(3)Section 145(3)Section 69C

else and not from the four parties in whose names the bills were procured and hence, the only recourse left is to estimate the profit element embedded in the purchases made during the year of Rs. 1,13,44,778/- , rather than on Rs. 1,31,88,227/- (which included ... addition made by the AO u/s 69C of the Act to the tune of Rs. 1,31,88,227/- which was restricted to profit element embedded in the purchases to the tune of 12.5% of Rs. 1,13,44,778/. The ld. Counsel for the assessee submitted that the following

Ashwin Purshotam Bajaj, Mumbai vs. ITO, Ward- 16(2)(1), Mumbai

In the result , we dismiss both the appeal of the assessee as well of Revenue

ITA 4736/MUM/2014[2010-11]Status: DisposedITAT Mumbai14 Dec 2016AY 2010-11

Bench: Shri Mahavir Singh & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 4736/Mum/2014 ("नधा"रण वष" / Assessment Year : 2010-11) Shri Ashwin Purshotam The Ito – Ward 16(2)(1), बनाम/ Bajaj, Mumbai. V. C/O Shri Prakash Jhunjhunwala, Chartered Accountant, 5, Jolly Bhawan No. 2, 7 New Marine Lines, Churchgate, Mumbai – 400020. "थायी लेखा सं./Pan : Aacpb7522J .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Respondent: Shri Vikash Kumar Agarwal
Section 143(3)Section 145(3)Section 69C

else and not from the four parties in whose names the bills were procured and hence, the only recourse left is to estimate the profit element embedded in the purchases made during the year of Rs. 1,13,44,778/- , rather than on Rs. 1,31,88,227/- (which included ... addition made by the AO u/s 69C of the Act to the tune of Rs. 1,31,88,227/- which was restricted to profit element embedded in the purchases to the tune of 12.5% of Rs. 1,13,44,778/. The ld. Counsel for the assessee submitted that the following

Lotus Energy (I) Ltd, Mumbai vs. CIT RG 8, Mumbai

In the result, the appeal filed by the assessee in ITA No

ITA 4355/MUM/2011[2006-07]Status: DisposedITAT Mumbai14 Dec 2016AY 2006-07

Bench: Shri Mahavir Singh & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 4355/Mum/2011 ("नधा"रण वष" / Assessment Year : 2006-07) M/S Lotus Energy (India) Commissioner Of Income बनाम/ Ltd., Tax- Range 8, V. 409, Laxmi Plaza, 2 Nd Floor, Aaykar Bhavan, Laxmi Industrial Estate, M.K. Road, Andheri (W), Mumbai. Mumbai -400053. "थायी लेखा सं./Pan : Aabcl6119K (अपीलाथ" /Appellant) .. (""यथ" / Respondent)

For Respondent: Shri R.P. Meena
Section 143(3)Section 263Section 32Section 40

service providers and separate debit note, with supporting ITA 4355/Mum/2011 9 documents for rate charged are also supplied on which there is no profit element of the supplier included. d. In most of the case the suppliers have made payment for a larger quantities and taken reimbursement of your assessee

Vijendra S. Anjure, Mumbai vs. ITO 22(2)(2), Mumbai

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

ITA 2979/MUM/2016[2010-11]Status: DisposedITAT Mumbai09 Dec 2016AY 2010-11

Bench: Shri G.S.Pannumr. Vijendra Anjure, Shankar Devol, Laxminagar Society, Opp. Bpcl, Northgate, Chembur, Mumbai 400074 Pan: Abmpa2088H ...... Appellant Vs. The Income Tax Officer 22(2)(2), Mumbai .... Respondent

For Appellant: Shri Kuldip MehtaFor Respondent: Ms. Beena
Section 143(3)

appeal, but the only point substantively argued at the time of hearing is against the action of the CIT(A) in holding that profit element in relation to unproved purchases of Rs.2,28,00,000/- be brought to tax @10% as against addition 2 made by the Assessing Officer ... made to page -11 of the Paper Book, wherein is placed the details of purchases. It was therefore, contended that both the rate of profit element as well as purchases have been taken at excessive figures. 4. On the other hand, Ld. Departmental Representative has contended that the addition