The assessee, engaged in the business of trading in ferrous and non-ferrous metals, was subjected to reassessment on the allegation that purchases of ₹3.02 crore from a supplier were accommodation entries. Although the Assessing Officer found that the supplier was not traceable and restricted the addition to 12.5% of the alleged bogus purchases, he accepted the corresponding sales, quantitative stock records and payments made through banking channels. The Tribunal held that where the sales and stock records are accepted, the entire purchases cannot be treated as bogus and only the profit element embedded in such purchases can be brought to tax. The rate of profit cannot be applied mechanically and must depend upon the nature of the business and the facts of the case. Since the assessee was engaged in the low-margin trade of ferrous and non-ferrous metals, had disclosed a net profit of 2.80%, and the Revenue had not established any higher profit, following the decisions in Sterling Steel Industries v. ITO and Kishorkumar M. Vyas v. ITO, the Tribunal restricted the addition to 2% of the disputed purchases and deleted the balance addition. (ITA No. 450/Mum/2026, dt. 28-07-2026.)  (AY. 2020-21)