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2017 (3) TMI 678 - AT - Income TaxAddition on account of gross profit on the unrecorded purchases - assessee has shown its net profit @ 5% of the turnover and accordingly was of the view that the same amount of profit @ 5% should be adopted for the impugned undisclosed purchase - Held that:- On examination of lower authorities, we find that sufficient opportunities were given by the lower authorities to counter the allegations framed by the AO but the assessee failed to do so. The ld AR before us has also not brought anything contrary to the finding of ld CIT(A). Now coming to the rate adopted by the AO for determining the profit on the undisclosed purchases we find that the lower authorities have taken the GP rate as disclosed by the assessee in this return of income and the same rate of profit has also been applied on the undisclosed purchases. The argument of the assessee that the net profit on the undisclosed purchases should be used to work out profit does not have any force. It is because that all the indirect expenses has been duly incurred and claimed by the assessee against the disclose sales of the business. Thus, we are of the view there was no indirect expense which was incurred by the assessee in relation to undisclosed sale and not claimed. Thus, in our considered view the GP rate adopted by the lower authorities is reasonable in the working out the taxable income on the undisclosed purchases. However, in the interest of justice & fair play we are inclined to give one more opportunity to the assessee as he is alleging that the information received in response to the notice issued u/s 133(6) of the Act has not been confronted and DR also has no objection in this regard. Addition on account of circulating capital invested in the undisclosed purchases - Held that:- We have already restored the ground No. 4 to the file of AO for fresh adjudication in relation to the taxable profit on the undisclosed purchases. Indeed, undisclosed purchases were made by the assessee and therefore the element of the circulating capital invested in the undisclosed purchases cannot be ignored. Therefore, it is necessary to bring the same under the tax net. The ld AR has submitted that the undisclosed purchases were made on the basis of credit but he failed to bring any evidence in support of his claim. As the present issue is concerned and connected with the ground no. 4 which has been allowed for statistical purposes, therefore we are also inclined to restore this ground to the AO for fresh adjudication in accordance with the law. Disallowance u/s 40A(3) - Held that:- AR has not brought anything on record contrary to the finding of ld CIT(A). Thus, we do not find any reason to interfere in the order of ld CIT(A). Hence the ground of appeal raised by the assessee is hereby dismissed. Addition u/s.69 - Held that:- AR has not brought anything on record contrary to the finding of ld CIT(A). Though, the assessee was provided several opportunities at the time of appellate stage and remand stage but details was submitted to counter the allegation of the AO. Even before us the ld. AR failed to submit any details. Thus we do not find any reason to interfere in the order of ld CIT(A). Hence, the ground of appeal raised by the assessee is hereby dismissed.
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