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2014 (8) TMI 720 - AT - Income TaxRejection of books of accounts u/s 145(3) – Estimation of GP @ 8% - Held that:- Despite given an opportunity by the AO, the assessee failed to substantiate as to why the same gross profit ratio should not be adopted in its case - CIT(A) was not justified in reducing the gross profit to 8% as against 9% held by the AO - since the purchases from Bharat Steel Company were held to be non-genuine and it was brought to the notice of the assessee by the AO that the price paid to Bharat Steel Company is higher than price charged by other traders for the same product on the same date - the AO has discharged his onus and onus was on the assessee to prove the genuineness of purchases - The assessee has failed to do so – relying upon M/s. Fortune Steel Industries Vs. ACIT [2010 (12) TMI 1108 - ITAT MUMBAI] - in a case where the purchase prices are not verifiable as the parties were not found and in such cases the books should be rejected and the gross profit rate could be estimated - the CIT(A) was justified in upholding the action of the AO in rejecting the book results – Decided against Assessee. Once the AO has established that the price paid to a party is higher as compared to similar products supplied by other parties on the same date and the party to whom higher price has been paid is not traceable and the assessee has not made any efforts to produce the party or give his present address, therefore, the socalled purchases from the said party become suspicious, the AO is fully justified in rejecting the book results and going for estimation. The assessee has categorically explained before the lower authorities that M/s. Asvee Trading Company is not a comparable case since the assessee is a wholesaler whereas the said party is a retailer - No other comparable case was given by the AO - the results of the preceding and succeeding years results were not considered by the AO so as to come to a definite conclusion as to the rate of gross profit in the case of the assessee, vis-a-vis other concerns – thus, the matter is to be remitted back to the AO for decision of the rate of GP.
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