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2017 (2) TMI 999 - AT - Income TaxDisallowance of 20% of the purchases and 10% of labour charges - assessee has not produced books of accounts, cash book, bills, vouchers, stock register etc though specifically called for - CIT (Appeals) restricted the gross profit to 10% and no separate additions were made towards purchases and labour charges on account of non production of details - Held that:- No infirmity in estimating the gross profit by the Ld. CIT (Appeals) concluding that there is short disclosure of profit to the extent of ₹ 11,38,320/- which is liable to be assessed in the hands of the assessee on account of low GP, non production of books of accounts and absence of verification of purchase bills and vouchers of labour expenditure. Since the GP percentage have been applied which takes care of direct cost on purchases as well as labour expenses, no separate adhoc addition for purchases and labour expenses are required. As we observe that there is a wide gap in gross profit percentage declared by the assessee during the assessment years 2006-07 and 2009-10, therefore, the average gross profit rate arrived by the Ld. CIT (Appeals) at 12% and further reduction of 2% granted for fall in profits due to competitive prices for increasing the turnover may not be sufficient. Therefore, we are of the view that a further reduction of 2% should be allowed to the assessee. Therefore, we direct the assessing officer to estimate the gross profit at 8% on the turnover and recompute the income accordingly. We make it clear that there should not be any adhoc disallowance towards purchases and labour charges separately. - Decided party in favour of assessee
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