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2022 (9) TMI 972 - ITAT MUMBAIEstimation of income - bogus purchases - HELD THAT:- We are of the considered view that in the present case, the lower authorities though correctly agreed that only profit embedded in the sales could be brought to tax, however, placed reliance upon the aforesaid decision of Hon”ble Gujarat High Court [2013 (10) TMI 1028 - GUJARAT HIGH COURT] to restrict the disallowance to 12.5% without appreciating the basis on which such percentage of addition was arrived at in the facts of that case. In the present case, reliable industry data was also not brought on record to prove the prevailing profit margin of the ferrous and non-ferrous industry during the relevant assessment year. We deem it fit to modify the impugned order only to the extent that the disallowance on account of bogus purchases should be restricted to the total of rate of VAT applicable during the year under consideration in the State of Maharashtra on the goods traded by the assessee and gross profit earned by the assessee during the year under consideration. We, accordingly, direct the AO to recomputed the disallowance. The sole ground raised in assessee's appeal is partly allowed.
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