← All Phrases

“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

Accurate Buildcon, Rajkot vs. DCIT, CC-1, Rajkot

ITA 766/RJT/2024[2017-18]Status: DisposedITAT Rajkot09 Mar 2026AY 2017-18

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

For Appellant: Shri Mehul Ranpura, Ld. ARFor Respondent: Shri Abhimanyu Singh Yadav, Ld. Sr. (DR)
Section 133ASection 139Section 143(3)Section 147Section 148Section 250

technical grounds raised by the assessee, challenging reopening of assessment under section 147/148 of the Act. On merit, learned CIT(A), estimated the profit element on the “on money”, at the rate of 8%, 12%, 16% etc, in a different assessment years in similar group cases. Therefore, assessee ... wherein, 6% addition was made on the “on-money”. In all the projects of M/s R.K. Group, on the “on-money” different estimation of profit element have been made by ld CIT(A), which are, at the rate of 8%, 12%, 12.5%, 16% and 20% etc. After

DCIT, Central Circle 1, Rajkot vs. Krishna Developers, Rajkot

ITA 688/RJT/2024[2018-19]Status: DisposedITAT Rajkot09 Mar 2026AY 2018-19

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

For Appellant: Shri D.M. Rindani, Ld. ARFor Respondent: Shri Sanjay Punglia, Ld. CIT(DR)
Section 132Section 133ASection 143(3)Section 147Section 250

profit out of such receipt must bear an element of estimation. In view of the legal position that not the entire receipts, but the profit element embedded in such receipts, can be brought to tax. Hence, adding entire amount of sale consideration received in cash will not serve ... justice. Sale proceeds comprise of cost expenses (as tabulated above) and profits out of entire sale proceeds, only profit element is liable to tax. When the appellant is found to have not incorporated entire sale proceeds in the regular books of account and the assessing officer is not satisfied about

Krishna Developers, Rajkot vs. Deputy Commissioner of Income Tax, Central 1, Rajkot

ITA 544/RJT/2024[2019-20]Status: DisposedITAT Rajkot09 Mar 2026AY 2019-20

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

For Appellant: Shri D.M. Rindani, Ld. ARFor Respondent: Shri Sanjay Punglia, Ld. CIT(DR)
Section 132Section 133ASection 143(3)Section 147Section 250

profit out of such receipt must bear an element of estimation. In view of the legal position that not the entire receipts, but the profit element embedded in such receipts, can be brought to tax. Hence, adding entire amount of sale consideration received in cash will not serve ... justice. Sale proceeds comprise of cost expenses (as tabulated above) and profits out of entire sale proceeds, only profit element is liable to tax. When the appellant is found to have not incorporated entire sale proceeds in the regular books of account and the assessing officer is not satisfied about

Krishna Developers, Rajkot vs. The Deputy Commissioner of Income Tax, Central-1, Rajkot

ITA 543/RJT/2024[2018-19]Status: DisposedITAT Rajkot09 Mar 2026AY 2018-19

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

For Appellant: Shri D.M. Rindani, Ld. ARFor Respondent: Shri Sanjay Punglia, Ld. CIT(DR)
Section 132Section 133ASection 143(3)Section 147Section 250

profit out of such receipt must bear an element of estimation. In view of the legal position that not the entire receipts, but the profit element embedded in such receipts, can be brought to tax. Hence, adding entire amount of sale consideration received in cash will not serve ... justice. Sale proceeds comprise of cost expenses (as tabulated above) and profits out of entire sale proceeds, only profit element is liable to tax. When the appellant is found to have not incorporated entire sale proceeds in the regular books of account and the assessing officer is not satisfied about

Siddheshwar Gems, Surat vs. ITO, Ward-3(3)(1), Surat

In the result, the appeal of the assessee stands allowed

ITA 860/SRT/2025[2018-19]Status: DisposedITAT Surat09 Mar 2026AY 2018-19

Bench: Shri Sanjay Garg & Shri Narendra Prasad Sinhaआयकर अपील सं /Ita No.860/Srt/2025 िनधा"रण वष" /Assessment Year : 2018-19 Siddheshwar Gems The Ito बनाम Plot No.263 Ward-3(3)(1) / First Floor Surat – 395 001 V/S. Gayatrinagar Housing Society Nr. Rachna Soc. L.H. Road Kapodra, Surat – 395 006 "थायी लेखा सं./Pan: Actfs 1753 M (अपीलाथ(/ Appellant) (!) यथ(/ Respondent) Assessee By : Shri P.M. Jagasheth, Ca Revenue By : Shri Ajay Uke, Sr.Dr सुनवाई की तारीख/Date Of Hearing : 10/12/2025 घोषणा की तारीख /Date Of Pronouncement: 09/03/2026 आदेश/O R D E R Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Of The Learned Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi [Hereinafter Referred To As ‘Cit(A)’] Dated 20/06/2025 Passed U/S.250 Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) For The Assessment Years (Ays) 2018-19. 2. The Assessee, In This Appeal, Has Raised The Following Grounds Of Appeal: Siddheshwar Gems Vs. Ito Asst. Year : 2018-19

For Appellant: Shri P.M. Jagasheth, CAFor Respondent: Shri Ajay Uke, Sr.DR
Section 147Section 148Section 250Section 271ASection 68

assessee. The AO had made the addition on account of bogus purchases, whereas, the assessee, in fact, had not made any such purchases. The profit element earned on the sales has already been offered for taxation. Therefore, the impugned additions made by the AO are not legally sustainable

Income Tax Officer-19(1)(5), Mumbai vs. Hitesh Khimchand Jain, Mumbai

In the result, appeal filed by the Revenue is allowed

ITA 8731/MUM/2025[2011-12]Status: DisposedITAT Mumbai09 Mar 2026AY 2011-12

Bench: Hon’Ble Shri Sandeep Gosain & Hon’Ble Shri Prabash Shankarincome Tax Officer-19(1)(5), Vs. Hitesh Khimchand Jain Room No. 502, 5Th Floor, 123 East, 1St Flr, Piramal Chambers , Shanti Bhawan, V.P. Lalbaug, Parel, Road Mumbai - 400012 Mumbai - 400004 Pan/Gir No. Afxpb7780C (Applicant) (Respondent) Assessee By None Revenue By Shri Brajendra Kumar (Sr. Dr.) Date Of Hearing 12.02.2026 Date Of Pronouncement 09.03.2026 आदेश / Order Per Sandeep Gosain, Jm: The Present Appeal Has Been Filed By The Revenue Challenging The Impugned Order 06.10.2025 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. Whether On The Facts & Circumstances Of The Case & In Law, The Citia) Arred In Restricting Addition On The Alleged Bogus Purchases Without Appreciating The Fact That Ao Made Addition On The Basis Information Was Received From The Sales Department Tax That The Assesses Was Beneficiary Of Hawala Bilis Or Accommodation Entries

Section 250Section 69C

account and estimated the income as per best judgment under Section 144 of the Act. Considering the facts, the AO held that the profit element embedded in such purchases should be treated as profit earned from such purchases and, accordingly, 15% of the bogus/non-genuine purchases was added to the income

Basant Lal Gupta, Sidhi vs. Income Tax Officer Ward 1, Rewa

In the result, ITA. No. 129/JAB/2024 & ITA

ITA 132/JAB/2024[2010-11]Status: DisposedITAT Jabalpur06 Mar 2026AY 2010-11

Bench: Shri Anadee Nath Misshra

Section 147Section 253(3)Section 271(1)(c)

bank was assessee’s business turnover; on which element of profit was a small portion of the total amount. He contended that only the profit element in the turnover I.T.A. No.129, 130 to 132/JAB/2024 Assessment Year:2010-11 3 should be taxed as income; and not the entire turnover. Further

Basant Lal Gupta, Sidhi vs. Income Tax Officer Ward 1, Rewa

In the result, ITA. No. 129/JAB/2024 & ITA

ITA 131/JAB/2024[2010-11]Status: DisposedITAT Jabalpur06 Mar 2026AY 2010-11

Bench: Shri Anadee Nath Misshra

Section 147Section 253(3)Section 271(1)(c)

bank was assessee’s business turnover; on which element of profit was a small portion of the total amount. He contended that only the profit element in the turnover I.T.A. No.129, 130 to 132/JAB/2024 Assessment Year:2010-11 3 should be taxed as income; and not the entire turnover. Further

Basant Lal Gupta, Sidhi vs. Income Tax Officer Ward 1, Rewa

In the result, ITA. No. 129/JAB/2024 & ITA

ITA 130/JAB/2024[2010-11]Status: DisposedITAT Jabalpur06 Mar 2026AY 2010-11

Bench: Shri Anadee Nath Misshra

Section 147Section 253(3)Section 271(1)(c)

bank was assessee’s business turnover; on which element of profit was a small portion of the total amount. He contended that only the profit element in the turnover I.T.A. No.129, 130 to 132/JAB/2024 Assessment Year:2010-11 3 should be taxed as income; and not the entire turnover. Further

Basant Lal Gupta, Sidhi vs. Income Tax Officer Ward-1, Rewa

In the result, ITA. No. 129/JAB/2024 & ITA

ITA 129/JAB/2024[2010-11]Status: DisposedITAT Jabalpur06 Mar 2026AY 2010-11

Bench: Shri Anadee Nath Misshra

Section 147Section 253(3)Section 271(1)(c)

bank was assessee’s business turnover; on which element of profit was a small portion of the total amount. He contended that only the profit element in the turnover I.T.A. No.129, 130 to 132/JAB/2024 Assessment Year:2010-11 3 should be taxed as income; and not the entire turnover. Further

Imran Siddiqui, Mysore vs. Income Tax Officer, Ward-2(2), Mysore

In the result, the appeal of the assessee id hereby allowed for statistical purposes

ITA 2238/BANG/2025[2014-15]Status: DisposedITAT Bangalore05 Mar 2026AY 2014-15

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessment Year: 2014-15

For Appellant: Shri Tarun Kothari, AdvocateFor Respondent: Shri Ganesh R Ghale, Advocate – Standing
Section 131Section 250Section 44A

revised computation filed by the assessee was examined in proper perspective. If the cash deposits are to be treated as business receipts, only the profit element can be brought to tax. On the other hand, if the explanation regarding business activity is found to be incorrect, then appropriate findings supported

Bhawarlal S Jain, Vijayapura vs. Income Tax Officer, Ward 1 & Tps, Bijapur

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

ITA 2138/BANG/2025[2014-15]Status: DisposedITAT Bangalore05 Mar 2026AY 2014-15

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessment Year: 2014-15

For Appellant: Shri Sudheendra BR, AdvocateFor Respondent: Shri Azhar Zain VP, CIT(DR)
Section 139(1)Section 143(1)Section 148Section 250Section 69A

income. The deposits were part of business turnover. When sales are not doubted, the entire sale proceeds cannot be treated as income. Only the profit element embedded in such sales can be brought to tax. If Rs. 100 represents unaccounted sales and the same amount is used to purchase stock ... deposits is not justified and only the gross profit can be added. Courts have consistently held that addition should be restricted to the profit element and not the entire amount. In similar cases of other assessees having accounts with the same bank and having made similar declarations under section

Ramasamy Sathish, Erode vs. ITO, Ward-2(1), Erode

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

ITA 2848/CHNY/2025[2016-17]Status: DisposedITAT Chennai04 Mar 2026AY 2016-17

Bench: Shri Aby T Varkey & Shri S. R. Raghunatha

For Appellant: Shri. Bhupendran, AdvocateFor Respondent: Ms. R. Anitha, Addl. CIT
Section 143(3)Section 250Section 44ASection 69

engaged in business and deposits in the bank account are relatable to business transactions, the entire deposits cannot be treated as income; only the profit element embedded therein can be brought to tax. The scheme of section 44AD itself contemplates taxation of income at a prescribed percentage of gross receipts

Parshuram Bindhnath Roy, Vadodara vs. The ITO, Ward-3(1)(2) Previously Ward- 3(1)(5), Vadodara

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

ITA 1652/AHD/2025[2017-18]Status: DisposedITAT Ahmedabad02 Mar 2026AY 2017-18

Bench: Dr. B.R.R. Kumar, Vice-Ms. Suchitra R. Kambleparshuram Bindhnath Roy, Income Tax Officer, Vs. 404, Atlantis Heights, Opp. Ward 3(1)(2), Vadiwadi Fire Station, Sarabhai Vadodara Main Road, Nr. Genda Circle, Vadodara-390023 [Pan : Ahdpr 3553 M] (Appellant) .. (Respondent) Appellant Represented By : Shri Jigar Adhyaru, Ca Respondent Represented By: Shri Abhijit, Sr Dr Date Of Hearing 19.02.2026 Date Of Pronouncement 02.03.2026 O R D E R Per Dr. B.R.R. Kumar, Vice-:-

Section 250Section 69A

mediator and the deposits represented reimbursement amounts from students. It was argued that only consultancy income constituted real income and, alternatively, only profit element could be taxed. 7. The Ld. DR, on the other hand, supported the orders of the lower authorities and submitted that the assessee failed to discharge

Ravindrakumar Amratlal Jain, Mumbai vs. Income Tax Officer Ward-19(3)(1), Mumbai

In the result Assessee’s Appeal, is partly allowed

ITA 3453/MUM/2025[2011-12]Status: DisposedITAT Mumbai02 Mar 2026AY 2011-12

Bench: Shri Narender Kumar Choudhryshri Jagadish

For Appellant: Mr. Dhaval Shah, Ld. ARFor Respondent: Shri Annavaram Kosuri (Sr
Section 143(2)Section 147Section 148Section 250

conclusive in a case, where genuineness of the transactions, is in doubt. The Assessing Officer thus on the aforesaid reasons, ultimately estimated the profit element at the rate of 12.5% of the total purchase of Rs.1,12,13,732/- and consequently made the addition of Rs.14

DCIT, Central Cirlcle 1, Rajkot vs. Buildcon Creations LLP, Rajkot

ITA 679/RJT/2024[2022-23]Status: DisposedITAT Rajkot27 Feb 2026AY 2022-23

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinhaआयकर अपील सं./Ita Nos. 539 To 542/Rjt/2024 (Assessment Year: 2019-20 To 2022-23) (Hybrid Hearing)

For Appellant: Shri D.M. Rindani / Ms. Devina Patel, Ld. ARFor Respondent: Shri Sanjay Punglia, CIT-DR
Section 143(3)Section 147

hands of the assessee. The assessee also submitted that entire sale proceeds cannot be regarded as net profit of the assessee and only profit element is to be taxed. That is, profit element on “on-money” should be taxed in the hands of the assessee. These profit estimation on different ... Bhavani Developers Pvt. Ltd. in Tax Appeal no. 267 of 2022, in this judgement, the Hon'ble Gujarat High Court has held that only profit element embedded in the gross “on-money” receipts at the rate of 6% can be taxed. The assessee also relied on various judgements of jurisdictional

DCIT, Central Circle 1, Rajkot vs. Buildcon Creations LLP, Rajkot

ITA 678/RJT/2024[2021-22]Status: DisposedITAT Rajkot27 Feb 2026AY 2021-22

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinhaआयकर अपील सं./Ita Nos. 539 To 542/Rjt/2024 (Assessment Year: 2019-20 To 2022-23) (Hybrid Hearing)

For Appellant: Shri D.M. Rindani / Ms. Devina Patel, Ld. ARFor Respondent: Shri Sanjay Punglia, CIT-DR
Section 143(3)Section 147

hands of the assessee. The assessee also submitted that entire sale proceeds cannot be regarded as net profit of the assessee and only profit element is to be taxed. That is, profit element on “on-money” should be taxed in the hands of the assessee. These profit estimation on different ... Bhavani Developers Pvt. Ltd. in Tax Appeal no. 267 of 2022, in this judgement, the Hon'ble Gujarat High Court has held that only profit element embedded in the gross “on-money” receipts at the rate of 6% can be taxed. The assessee also relied on various judgements of jurisdictional

DCIT, Central Circle-1, Rajkot vs. Buildcon Creations LLP, Rajkot

ITA 677/RJT/2024[2020-21]Status: DisposedITAT Rajkot27 Feb 2026AY 2020-21

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinhaआयकर अपील सं./Ita Nos. 539 To 542/Rjt/2024 (Assessment Year: 2019-20 To 2022-23) (Hybrid Hearing)

For Appellant: Shri D.M. Rindani / Ms. Devina Patel, Ld. ARFor Respondent: Shri Sanjay Punglia, CIT-DR
Section 143(3)Section 147

hands of the assessee. The assessee also submitted that entire sale proceeds cannot be regarded as net profit of the assessee and only profit element is to be taxed. That is, profit element on “on-money” should be taxed in the hands of the assessee. These profit estimation on different ... Bhavani Developers Pvt. Ltd. in Tax Appeal no. 267 of 2022, in this judgement, the Hon'ble Gujarat High Court has held that only profit element embedded in the gross “on-money” receipts at the rate of 6% can be taxed. The assessee also relied on various judgements of jurisdictional

DCIT, Central Circle 1, Rajkot vs. Buildcon Creations LLP, Rajkot

ITA 676/RJT/2024[2019-20]Status: DisposedITAT Rajkot27 Feb 2026AY 2019-20

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinhaआयकर अपील सं./Ita Nos. 539 To 542/Rjt/2024 (Assessment Year: 2019-20 To 2022-23) (Hybrid Hearing)

For Appellant: Shri D.M. Rindani / Ms. Devina Patel, Ld. ARFor Respondent: Shri Sanjay Punglia, CIT-DR
Section 143(3)Section 147

hands of the assessee. The assessee also submitted that entire sale proceeds cannot be regarded as net profit of the assessee and only profit element is to be taxed. That is, profit element on “on-money” should be taxed in the hands of the assessee. These profit estimation on different ... Bhavani Developers Pvt. Ltd. in Tax Appeal no. 267 of 2022, in this judgement, the Hon'ble Gujarat High Court has held that only profit element embedded in the gross “on-money” receipts at the rate of 6% can be taxed. The assessee also relied on various judgements of jurisdictional

Shiv Enterprise, Rajkot vs. The Deuty Commissioner of Income Tax, Central - 1, Rajkot

ITA 616/RJT/2024[2020-21]Status: DisposedITAT Rajkot27 Feb 2026AY 2020-21

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

For Appellant: Shri D.M. Rindani & Ms. Devina Patel Ld. ARsFor Respondent: Shri Abhimanyu Singh Yadav, Ld. SR. DR
Section 132Section 133ASection 143(3)Section 147

hands of the assessee. The assessee also submitted that entire sale proceeds cannot be regarded as net profit of the assessee and only profit element is to be taxed. That is, profit element on “on-money” should be taxed in the hands of the assessee. These profit estimation on different ... Bhavani Developers Pvt. Ltd. in Tax Appeal no. 267 of 2022, in this judgement, the Hon'ble Gujarat High Court has held that only profit element embedded in the gross “on-money” receipts at the rate of 6% can be taxed. The assessee also relied on various judgements of jurisdictional