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2016 (10) TMI 494 - ITAT MUMBAIGP determination - low in the G.P. rates - estimation of purchases - Held that:- It is seen that the learned CIT(A) noticed that in respect of these transactions, i.e. purchases of ₹ 70,60,756/- the assessee had shown G.P. of 0.68% on sale of items purchased from M/s. Crystal Enterprises and G.P. of 1.19% on sale of items purchased from M/s. Induja Traders Pvt. Ltd. Stating that, inter alia, the assessee had not given his overall G.P. ratio, the learned CIT(A) proceeded to hold, on estimate, that 25% of the purchases amounting to ₹ 70,60,756/- i.e. R.17,65,189/- is to be brought to tax in assessee’s hands. We find that this averment of the learned CIT(A) to be factually incorrect. In our view, when the G.P. of the assessee from A.Y. 2008-09 to 2010- 11 hovered between 1.11% to 0.76% and the G.P. on sale of the said purchases is 0.68% and 1.19%, nothing appears abnormally low in the G.P. rates. There is no basis whatsoever for the learned CIT(A) to have estimated the said purchases at ₹ 17,65,189/- (i.e. 25% of ₹ 70,60,756/-) and neither has the learned CIT(A) rendered any cogent reasons for coming to the said finding. In our view, the learned CIT(A)’s estimation that 25% of the alleged purchases of ₹ 70,60,756/- is profit therefrom, be taxed as income of the assessee, is unsustainable and therefore delete the same. Consequently, ground of assessee’s appeal is allowed.
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