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2017 (10) TMI 160 - AT - Income TaxBogus purchases - G.P. determination - Held that:- Considering the primary statements given by Shri Dharmichand Jain and the failure on the part of the assessee to produce the said parties for examination to the AO and also the decision in the case of Nikunj Eximp Enterprises (2013 (1) TMI 88 - BOMBAY HIGH COURT) we find, the decision of the CIT (A) in restricting the addition to a portion of the bogus purchases is justified. Regarding 12.5% adopted by the CIT (A) relying on the judgment of the Hon‟ble Gujarat High Court in the case of Simit P Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) we find, the said judgment is the source material for the said 12.5%. The CIT (A) did not apply his mind to the nature of the business, VAT % and the relatable GP & NP rates of the different businesses. In our view, the GP / NP rate vary from business to business. Profit percentage in construction business is similar to that of the Gold Jewellery business. In our view, it is not proper to adopt some percentage of construction business to the business of Gold Jewellery. Further, it is a well established company and the GP rates are varying from 5.37% (AY 2010-2011) to 10.26% (AY 2012- 2013). In our view, this issue of percentage GP or NP need to revisit the file of the AO. AO is directed to study the relevant details of the company or that of the other good comparable ones and decide the issue afresh after granting a reasonable opportunity of being heard to the assessee. Addition of interest attributable to advances given for acquisition of property - adequacy of own funds - Held that:- Considering the request of the Ld AR, we find, there is need for facts on if the assessee posses adequate own funds, if the interest bearing funds are found flowing in the advances given for purchase of the property etc. AO is directed to examine the issue afresh after granting a reasonable opportunity of being beard to the assessee
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