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2021 (4) TMI 40 - AT - Income TaxEstimation of income - Non genuine purchases of diamond - Commissioner (Appeals) submitted, disallowance at 5% is most reasonable as in some other cases the Tribunal has upheld disallowance at 8% of the non genuine purchases - reasonableness of the disallowance made at 5% of the non genuine purchases - HELD THAT:- On a perusal of the report of the Task Group for Diamond Sector under the aegis of Ministry of Commerce and Industry, Department of Commerce, Government of India, New Delhi in the year 2013, it is noticed that as per the benign assessment procedure (BAP) introduced in the budget presented in 2007-08, the threshold net profit rate was fixed at 8% which was subsequently revised to 6% as per CBDT Instruction No.2/2008 dated 22-02-2008. The task group has stated that the rate of 6% so fixed is nowhere reflective of the reality in the diamond manufacturing and trading industry, which operates on profit margin in the range of 1% to 3% only. Also in case of ITO vs Dhawal Exim P Ltd [2018 (11) TMI 1840 - ITAT MUMBAI] assessee, the first appellate authority himself has sustained addition @3% of the non genuine purchases under more or less identical facts and circumstances - thus disallowance at 3% of the alleged non genuine purchases would be fair and reasonable. Accordingly, direct the assessing officer to do so. Ground is partly allowed.
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