The AO disallowed the entire purchases on the ground that the assessee ha obtained  bogus purchase bills from  entry provider  on the basis of information from sales tax department . On appeal the CIT (A)  has confirmed  addition of two per cent. of the purchase amount as  profit. On appeal  the Tribunal directed the Assessing Officer to make a further addition of three per cent. On appeal by the revenue dismissing the appeal the Court held that the Tribunal has observed  that the assessee’s gross profit varied from five per cent. to 8.77 per cent. Since the purchases were made from the grey market, the corresponding profit element would be little higher. Therefore, the Tribunal directed the Assessing Officer to make a further addition of three per cent. on the bogus purchases and to estimate the income on such basis. There was no error or infirmity in the order of the Tribunal. ( AY.2010-11)