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2021 (1) TMI 873 - AT - Income TaxBogus purchases - Determination of GP rate at 56.6% - assessee argued when the AO accepted the corresponding sales of the bogus purchases, it is not practicable not to believe the purchases in the event of which the situation gives rise to abnormal GP and NP - HELD THAT:- Record speaks that it was made basing on the report of the Income Tax Inspector who reported that when he contacted one Sh. Rakesh Kumar Aggarwal one of the sellers to the assessee in the showroom, it was reported that the assessee was not carrying on any business activities of Pooja articles of brass and so on and so forth. There is no dispute that when the assessee filed voluminous record in support of his contentions, the same were forwarded to the learned Assessing Officer seeking remand report offering his remarks on the documents filed on behalf of the assessee, it goes undisputed that the learned Assessing Officer did not offer any adverse comments on the detailed submissions on facts by the assessee. AO neither rejected the books of accounts nor invoked the provisions of section 145 of the Act before disturbing the trading results. The submission of the assessee that the learned Assessing Officer did not bring any documentary evidence on record to show that the assessee did not purchase any goods as alleged in the assessment order goes undisputed. The prime factor which convinced the Ld. CIT(A) is that the learned Assessing Officer examined the books of accounts and documents punished by the assessee, both at the time of the assessment as well as during the first plate stage, but notice it was pointed out in them. Sales were accepted, but the purchases were suspected, leading to the rumours situation of producing the abnormal GP rate at 56.6%, which is not common in the business conducted by the assessee. Learned Assessing Officer failed to notice this factor also. For these reasons, taking a comprehensive review, we are of the considered opinion that the view taken by the learned Assessing Officer does not appear to be sound and the Ld. CIT(A) deleted the addition by taking a pragmatic view. We, therefore, do not think it necessary to interfere with the same. Unexplained deposits in the savings bank account - HELD THAT:- It is not the case of the revenue before us also that the documents produced by the assessee or their books of accounts are untrustworthy or suffer any legal infirmity. It is only on examination of these documents in the books of accounts, Ld. CIT(A) found that all the deposits are properly explained and are supported by relevant documents, which were available before the learned Assessing Officer, but the learned Assessing Officer failed to verify the same properly to reach a just conclusion. In the circumstances, we find it difficult to reject the factual findings of the Ld. CIT(A), which are formally based on the books of accounts and the other documents submitted by the assessee. Thus addition cannot be sustained and the Ld. CIT(A) rightly deleted the same. Revenue appeal dismissed.
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