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2017 (2) TMI 1084 - AT - Income TaxEstimation of gross profit on bogus purchases - rejection of books of accounts - Held that:- Once the rejection of books of accounts are accepted by assessee, the CIT(A) has no option but to estimate profit because the Revenue has not doubted the sales. We also find that the assessee could file the details of purchase and sales i.e. bills and vouchers but could not submit stocks statements. Even parties are not verifiable being Hawala dealers. In such circumstances, only profit rate is to be estimated, which CIT(A) has rightly estimated. However, the rate of profit is a little on lower side reasons being the assessee himself declare profit on the disclosed purchases and sales at 7.87%. But assessee made purchases of these items from Grey market and for that he has saved sale tax, octori tax and other benefits. We are of the view that a reasonable estimate should be made and according to us 10% of profit will made the end of justice. Accordingly, we are directed the AO to apply profit rate of 10% and accordingly assess the income. We directed the AO accordingly and appeal of Revenue is partly allowed.
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