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2020 (12) TMI 212 - AT - Income TaxEstimation of income - Bogus purchases - CIT-A sustaining addition to the tune of 3% of alleged disputed purchase by applying average Gross Profit Ratio in the appellant’s case - HELD THAT:- Unverifiable element involved in the purchases in question called for addition and the same can be to the extent of percentage of purchases which can be estimated by a reference to the gross profit rates. The resultant net profit, in our opinion, is not relevant in this context. In so far as the gross profit rate is concerned, it is observed that the assessee for the immediately succeeding three years that is A.Y. 2015-16, 2016-17 and 2017-18 wherein the turnover shown by the assessee was comparable to the four years under consideration was 6.14% as against the average GP rate of 3.17% declared by the assessee for all the four years under consideration. The average GP rate declared by the assessee for all the four years under consideration thus was less by about 3% than the average GP rate declared by the assessee for the immediately succeeding three years - additional GP rate of 3% adopted by the Ld. CIT(A) as the profit element embedded in the disputed purchases for all the four years under consideration was quite fair and reasonable - Decided against assessee. Addition u/s 40A(3) - HELD THAT:- It is observed that even though a possibility was expressed by the Ld. CIT(A) about the purchases in question having been made by the assessee from the grey market, there is no evidence whatsoever available on record to show that the said purchases were actually made by the assessee from the grey market and payments against the same were made in cash as alleged by the Ld. DR. In our opinion, this case is therefore not a fit case where the provision of section 40A(3) can be invoked and that too for the first time at this stage before the Tribunal. We, therefore, find no merit in the appeals of the Revenue
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