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2023 (7) TMI 331 - AT - Income TaxEstimation of income - Bogus purchases - Average rate of gross profit declared by the assessee is more than 17%, which was stated to be more than the industry average - HELD THAT:- We noticed earlier that the manufacturing loss declared by the assessee was less than the SION standards prescribed by DGFT. The gross profit rate declared by the assessee was more than the industry average. Hence, in the normal circumstances, no disallowance of purchases is called for. However, since some of the suppliers have stated that they have not supplied the materials and since the AO & DGCEI has opined that the assessee might have procured materials from others, it is possible that the assessee could have made some profit in such an exercise. Hence, in order to take care of revenue leakages, if any, some addition is called for. Thus we modify the order passed by Ld CIT(A) in all these years and direct the AO to restrict the addition on account of non-genuine purchases to 2% of the value of alleged bogus purchases in both the years., i.e., AY 2014- 15 and 2015-16. TP adjustment in respect of Commission on Corporate Guarantee given to the Associated Enterprises by the assessee -TPO made adjustment @ 1.50% of the Guarantee amount given by the assessee - HELD THAT:- We notice that the co-ordinate bench of Tribunal has examined an identical issue in the assessee’s own case in AY 2010-11 and the Tribunal has restricted the rate of commission at 0.50% of the value of loan actually availed by the Associated Enterprises. In this regard, the Tribunal has followed the decision rendered in the case of Everest Canto Cylinders Ltd [2015 (5) TMI 395 - BOMBAY HIGH COURT] - Since the decision rendered by Ld CIT(A) on this issue is covered by the decision rendered by the jurisdictional High Court and the Tribunal, we do not find any reason to interfere with the decision so taken by Ld CIT(A) on this issue. Addition made towards cash component paid in purchase of agricultural land - AO made the addition on the basis of a draft agreement found in the laptop of Shri Shalin Thaker - HELD THAT:- Discrepancies noticed in the draft agreement and also the fact that the AO did not conduct proper enquiries to find the veracity of the draft agreement would drive us to conclude that the AO could not have placed reliance on the draft agreement in entirety without corroborating the same with any independent enquiries. The above said view of ours finds supports from the decision of AKME PROJECTS LTD. [2013 (12) TMI 197 - DELHI HIGH COURT] as held draft agreement to sell could have been the starting point of investigation and further detailed verification, which has not been carried out. Decided in favour of assessee.
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