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2020 (5) TMI 481 - AT - Income TaxBogus purchases - basis of estimating the gross profit rate of 19.25% - HELD THAT:- In the instant case, the CIT(A) has therefore rightly held that after rejection of books of accounts, the past history of the assessee has to be seen for estimating the gross profit rate. At the same time, we find that the basis of estimating the gross profit rate of 19.25% as against declared GP rate 14.99% is not discernable from the order of the CIT(A) where he has only stated that purchases to the tune of ₹ 2,11,15,458/- were found bogus/unverifiable which constitute 50% of total purchases.He has not taken into consideration the fact that the assessee has started diamond trading business during the year under consideration wherein he has disclosed gross profit rate of 10%. Given that the assessee has disclosed gross profit rate of 10% in respect of diamond trading which is stated to be pretty robust as per industry standards and in respect of trading of semi precious stone and studded jewellery, he has disclosed a gross profit rate of 20% which is better than the average gross profit rate of last three assessment years we find that even where the books of accounts have been rejected, there is no basis for making trading addition in the hands of the assessee. See GOTAN LIME KHANIJ UDHYOG. [2001 (7) TMI 19 - RAJASTHAN HIGH COURT]. - Decided in favour of assessee.
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