The assessee undertook civil contract works mostly for the Municipal Corporation of Greater Mumbai. The assessment  was reopened on the basis of information received from the Sales Tax Department through the Director General (Inv) on the ground that the assessee had made purchases for an amount which seemed to be accommodation entries. Order was passed making an addition of the amount as bogus purchase under section 69C of the Act. On appeal the assessee has produced the purchase invoices and ledger statements. Commissioner (Appeals) held that  payments made by the assessee were through banking channels, that there was no evidence to prove that the cash had flowed back to the assessee, and that the sale proceeds of the goods having been duly accounted for in the books of account and offered to tax, the entire purchase amount could not have been added and restricted the disallowance at 12.5 per cent. The Tribunal held that without purchasing materials and goods, it would not have been possible on the part of the assessee to execute the contract work with the Municipal Corporation which was a Government authority, that the Assessing Officer did not dispute the turnover of the contract work executed by the assessee and that unless the assessee procured the materials and goods, if not from the declared sources but from some other sources, it would not be possible on the part of the assessee to execute the contract and that the entire purchase made by the assessee could not be added back as income, but only the profit element embedded therein. On appeal dismissing the appeal the Court held that the Tribunal had taken into account all the relevant facts before passing the order holding that the entire purchase made by the assessee could not be added back as income but only the profit element embedded therein. The order of Tribunal affirmed. Referred  N.K. Proteins Ltd. v. Dy.CIT  (2020) 421 ITR 15 (St)  N.K. Industries Ltd v. Dy.CIT (2017) 8 ITR-OL. 336 (Guj.)(HC)  (AY.2009-10)