The Assessing Officer disallowed the entire value of purchases which he considered bogus, although the assessee’s corresponding sales were not disputed. On appeal, the CIT(A) held that since sales were accepted, the entire purchase expenditure could not be disallowed and restricted the addition to 12.5 per cent of the purchase value, being the estimated profit element. The Tribunal upheld this finding. Affirming the Tribunal’s decision, the High Court held that where sales are not disputed, only the profit element embedded in the alleged bogus purchases can be added to the income. The Court noted that the estimation of such profit is a question of fact and as the Tribunal had accepted the 12.5 per cent estimate, no substantial question of law warranted interference. (AY. 2009-10,  2011-12)