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2016 (10) TMI 623 - AT - Income TaxDisallowance of purchase on adhoc basis - gp determination - Held that:- We find that the ld.CIT(A) while granting partial relief to the assessee has noted that assessee is trader of wastepaper and purchaser of waster-paper and assessee purchases it from small time vendors and in turn the waste-paper is supplied to the paper-mills. He has further given a finding that the purchase price of waste-paper is fixed by the Gujarat Paper Mills Association and the waste-paper traders have VAT registration and other required permissions and it files the details of turnover, etc. through the VAT returns before the VAT authorities. He has further noted that AO has not doubted the purchases made by the assessee nor has got on record any instance of waste-paper purchases made by the assessee found to be bogus or inflated. He has further noted that assessee had furnished quantitative details of purchase and stock alongwith tax audit report and had shown a GP of 7% and that in similar cases, the Central Circle Surat had estimated the Gross Profit and enhanced the rate between 0.5% to 0.75%. Considering the totality of the facts, he has given a finding that 15% margin in the trading business is not possible and thereafter he considered that the Net Profit rate could be between 2 to 3% and thereafter estimated the Net Profit rate at 3% as against 2.68% shown by the assessee. Before us, neither the Revenue nor the assessee has placed any material on record to controvert the findings of ld.CIT(A).
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