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“profit element”

DisallowancesSection 69CSection 69C5,654 judgments

The decision most relied on for profit element is CIT v. Simit P. Sheth (356 ITR 451), cited in 1,465 judgments on BharatTax.

Leading authorities on profit element

CIT v. Simit P. Sheth
356 ITR 451 · 2013 · High Court
1,465
citing judgments

Additions for alleged bogus purchases should be restricted to the profit element, not the entire turnover. The profit element is often estimated at 12.5% of the purported bogus purchases.

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.

PCIT v. Mohommad Haji Adam & Co.
103 Taxmann.com 459 · 2019 · High Court
146
citing judgments

Where purchases are found to be bogus, the profit element embedded in such purchases is to be brought to tax, not the entire purchase value. An addition for non-genuine purchases may be justified.

Judgments citing profit element

Deputy Commissioner of Income Tax (Central Circle)- 3(1), Kolkata vs. Auxinite Suppliers Private Limited, Kolkata

In the result, the appeal of the Revenue is dismissed and CO of the assessee is allowed

ITA 139/KOL/2025[2019-2020]Status: DisposedITAT Kolkata02 Apr 2026AY 2019-2020

Bench: Shri Rajesh Kumar, Am & Shri Pradip Kumar Choubey, Jm Dy. Commissioner Of Income Auxinite Suppliers Private Tax (Cc)-3(1) Limited 4Th Floor, Aaykar Bhawan 44/2A Jain Tower, Hazra Road, Vs. Poorva, 110 Shantipally, Kolkata- Kolkata-700019, West Bengal 700017, West Bengal (Appellant) (Respondent) Pan No. Aaecb3974H Co No. 11/Kol/2025 (Arising In Ita No. 139/Kol/2025 For A.Y. 2019-20) Dy. Commissioner Of Income Auxinite Suppliers Private Tax (Cc)-3(1) Limited 4Th Floor, Aaykar Bhawan 44/2A Jain Tower, Hazra Road, Vs. Poorva, 110 Shantipally, Kolkata- Kolkata-700019, West Bengal 700017, West Bengal (Appellant) (Respondent) Assessee By : S/Shri Rajeeva Kumar & Giridhar Dhelia, Ars Revenue By : Shri V. Vidhyadhar, Dr Date Of Hearing: 11.02.2026 Date Of Pronouncement: 02.04.2026

For Appellant: S/Shri Rajeeva Kumar &For Respondent: Shri V. Vidhyadhar, DR
Section 132Section 133(6)Section 143(2)Section 153CSection 68

taking a holistic view of the facts and circumstances of the case, we find it proper to consider net profit element @ 5% of the sale consideration i.e. 5% of Rs.17,05,60,000/- which comes to Rs.85,28,000/- be subjected to tax. We, accordingly delete the addition ... extent of Rs.16,20,32,000/- made u/s 68 of the Act and sustain the balance of Rs.85,28,000/- towards profit element on the impugned sale transaction of shares undertaken by the assessee.” A similar view has also been taken by the Hon. Tribunal, “B” Bench in the case

M/S. Pearl Tracom Pvt. Ltd., Kolkata vs. DCIT, Central Circle 3(1), Kolkata

In the result, the appeal of the assessee is allowed

ITA 1201/KOL/2025[2019-2020]Status: HeardITAT Kolkata02 Apr 2026AY 2019-2020

Bench: Shri Rajesh Kumar, Am & Shripradip Kumar Choubey, Jm M/S Pearl Tracom Pvt. Ltd. Dcit, Central Circle 3(1) C/O M/S Salarpuriajajodia& Co.7, Aaykar Bhawan, P-7, C.R. Avenue, 3Rd Floor, Chworinghee Square, Kolkata- Vs. Kolkata-700072, West Bengal 700069, West Bengal (Appellant) (Respondent) Pan No. Aabcp9934G Assessee By : Shri Siddarth Jhajharia, Ar Revenue By : Shri Sanat Kumar Raha, Dr Date Of Hearing: 02.04.2026 Date Of Pronouncement: 02.04.2026

For Appellant: Shri Siddarth Jhajharia, ARFor Respondent: Shri Sanat Kumar Raha, DR
Section 133(6)Section 133ASection 143(3)Section 148Section 69C

taking a holistic view of the facts and circumstances of the case, we find it proper to consider net profit element @ 5% of the sale consideration i.e. 5% of Rs.17,05,60,000/- which comes to Rs.85,28,000/- be subjected to tax. We, accordingly delete the addition ... extent of Rs.16,20,32,000/- made u/s 68 of the Act and sustain the balance of Rs.85,28,000/- towards profit element on the impugned sale transaction of shares undertaken by the assessee. 16. In the result, appeal of the assessee is partly allowed. 9.4. It is clear from

Piyush Amritlal Mehta, Mumbai vs. ITO -19(2)(4), Mumbai

In the result, the appeal filed by the assessee stands dismissed with no order as to cost

ITA 8563/MUM/2025[2011-12]Status: DisposedITAT Mumbai01 Apr 2026AY 2011-12

Bench: Hon’Ble Shri Sandeep Gosain & Hon’Ble Shri Jagadishpiyush Amritlal Mehta Vs. Income Tax Officer – 10/11 Ground Floor 48Th 19(2)(4) Khetwadi Lane, Piramal Chambers, Mumbai - 400004 Mumbai - 400012 Pan/Gir No. (Applicant) (Respondent) Assessee By None Revenue By Shri Virabhadra Mahajan, (Sr. Dr.) Date Of Hearing 05.03.2026 Date Of Pronouncement 01.04.2026 आदेश / Order Per Sandeep Gosain, Jm: The Present Appeal Has Been Filed By The Assessee Challenging The Impugned Order 16.10.2025 Passed U/S 250 Of The Income Tax Act, 1961 (‘The Act’), By The National Faceless Appeal Centre, Delhi (Nfac) For The Assessment Year 2011-12. The Following Grounds Are Reproduced Below: “1. On The Facts & In The Circumstances Of The Case & In Law, The Penalty Proceedings Initiated U/S 271(1) (C) Of The Act Is Invalid & Bad In Law.

Section 250Section 271(1)Section 271(1)(C)Section 271(1)(c)

additions were made in the case of the assessee. 6. We further noticed that the assessee had indulged in bogus purchases, and only the profit element of those purchases had been added, which goes to show that the assessee had concealed the income to that extent under the garb ... Kevalchand Mehta vs. ACIT (2025) 212 ITD 229: "Where the assessee made bogus purchases from Hawala Parties and concealed income to the extent of profit element in garb of purchases, penalty u/s 271(1)(c) was leviable." Further, in the judgment of Hon'ble High Court of Delhi

Bahucharkrupa Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2363/AHD/2025[2024-25]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2024-25

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Bahucharkrupa Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2362/AHD/2025[2023-24]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2023-24

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Bahucharkrupa Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2361/AHD/2025[2022-23]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2022-23

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Bahucharkrupa Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2360/AHD/2025[2021-22]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2021-22

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Bahucharkrupa Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2359/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2020-21

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2358/AHD/2025[2024-25]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2024-25

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2357/AHD/2025[2023-24]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2023-24

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2356/AHD/2025[2022-23]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2022-23

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2355/AHD/2025[2021-22]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2021-22

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Trading Co., Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2354/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2020-21

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Ashish Trade Link LLP, Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2353/AHD/2025[2023-24]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2023-24

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Ashish Trade Link LLP, Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2352/AHD/2025[2022-23]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2022-23

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Ashish Trade Link LLP, Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2351/AHD/2025[2021-22]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2021-22

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Ambica Ashish Trade Link LLP, Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2350/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2020-21

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Deputy Commisioner of Income Tax Central Circle 1.4 Ahmedabad, Ahmedabad vs. Ambica Ashish Trade Link LLP, Ahmedabad

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

ITA 2285/AHD/2025[2023-24]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2023-24

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Deputy Commisioner of Income Tax Central Circle 1.4 Ahmedabad, Ahmedabad vs. Ambica Ashish Trade Link LLP, Ahmedabad

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

ITA 2284/AHD/2025[2022-23]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2022-23

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated

Deputy Commisioner of Income Tax Central Circle 1.4 Ahmedabad, Ahmedabad vs. Ambica Ashish Trade Link LLP, Ahmedabad

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

ITA 2248/AHD/2025[2021-22]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2021-22

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions on the basis of loose sheets found from the premises which are not known/owned by the appellant ... facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in sustaining the addition of profit element on alleged unaccounted sales and agency-based transactions solely on the basis of Tally data prepared by the Department, which is neither reliable nor independently corroborated