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2018 (12) TMI 974 - AT - Income TaxAddition of profit rate at the rate of 12.5% of the bogus purchases - purchases from grey market - Held that:- Revenue has not doubted the sales carried out of the bogus purchases by the assessee. The assessee also maintain stock tally, payments are made by cheque. But the assessee could not produce delivery challans, lorry receipts, transportation details etc. during the course of assessment proceedings and even now before us. These parties i.e. the seller parties have admitted that they have not made any sale or purchase transaction and in that eventuality only inference can be drawn is that the assessee might have made purchases from grey market and made sales. In this entire process, the assessee might have save the VAT payment and made purchases at a lower rate from grey market. Hence, assessee might have earned higher profit. Accordingly, now the only alternative left with the AO is application of profit rate. The AO has estimated the profit rate @ 12.5%, which is confirmed by the CIT(A) relying on the decision of Hon’ble Gujarat High Court in the case of Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] and Bholenath Poly Fab P. Ltd. [2013 (10) TMI 933 - GUJARAT HIGH COURT]. I find from the facts of the case that the lower authorities have rightly estimated the profit rate @ 12.5% & which is quite reasonable. - Decided against assessee.
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