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2015 (6) TMI 478 - ITAT DELHI

2015 (6) TMI 478 - ITAT DELHI - TMI - Unexplained low gross profit rate - CIT(A) deleted the addition - Held that:- Considering the judicial precedent laid down by the ITAT in assessees own case wherein the M.A. filed by the Revenue stands allowed on similarity of facts wherein held as Tribunal did not consider this contention of the Revenue based on the findings in the assessment order that assessee failed to justify the market rate vis-`-vis the purchase price paid to sister concern and this w .....

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15 - Diva Singh, JM And Inturi Rama Rao, AM,JJ. For the Appellant : Shri Gaurav Dudeja, Sr. DR For the Respondent : None ORDER Per Diva Singh,JM. The present appeal is listed before us as a result of order dated 03.08.2012 in MA.No.-580/Del/2009 by which order dated 06.09.2007 in ITA no.957/Del/2005. in the first round was recalled by the Co-ordinate Bench. 2. By the present appeal filed by the Revenue the correctness of the order dated 29.12.2007 of CIT(A)-Faridabad in 2000-01 has been assailed .....

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st the said order. The department thereafter had filed an MA No.-580/Del/2009 on the following grounds before the Co-ordinate Bench on 09.01.2009:- "That there is prima facie mistake in the order of ITAT as the assessing officer has considered the issue of purchases made from its sister concern to the tune of ₹ 16458685/- [Rs.1,47,74,255/- from M/s blue Stamping & Forgings Ltd.+ ₹ 1684430/- from M/s Blue Forgings (P.) Ltd.] which assessee failed to justify the market rate vi .....

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e M.A. be allowed." 3.1. Convinced with the plea taken, the MA filed by the department was allowed by the Co-ordinate Bench holding that there was a mistake in the aforesaid order of the Tribunal in as much as it did not consider this contention of the Revenue based on the findings in the assessment order that assessee failed to justify the market rate vis-vis the purchase price paid to sister concern and this was one of the main reasons for fall in GP. The Coordinate Bench on a perusal of .....

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f the order is known to the assessee as the same counsel represented in the M.A. also. However, in the present proceedings pursuant to the order in MA, the assessee remained unrepresented. The record shows that notice for the specific date of hearing has been issued to the assessee on 03.03.2015 for both the assessees appeal as well as the CO filed by the assessee. Despite this, no one was present of behalf of the assessee. The record further shows that even on earlier occasion i.e. in response .....

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the assessee had fallen. For ready-reference, we reproduce the relevant portion from the assessment order:- ".The assessee company has no other explanation to offer for the steep fall in g.p. The assessee company was also requested to justify the purchase price paid to sister concerns as under:- (i) Blue Stamping and Forging Ltd. ₹ 1,47,74,255/- (ii) Blue Forging Pvt. LTd ₹ 16,84,430/- The above mentioned two companies are persons referred to in Section 40A(2B). As mentioned abo .....

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ciate concern is required to be disallowed in computing its profit of the business or profession to the extent the expenditure is considered to be excessive or unreasonable. The reasonableness of any expenditure is to be judged having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession or the benefit derived by, or according to the tax payers from the expenditure. Such portion of the expenditure .....

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unt. In view of the above document and discussion, it is held that the assessee company has not satisfactorily explained the steep fall in g.p. rate. After giving credit to the explanation of the assessee, the difference on account fall in gross profit during the year, which amounts to ₹ 19,24,207, is therefore added to the income of the assessee company from business." 5. Referring to the order of the CIT(A) which finding has been upheld by the ITAT which has been recalled it was poi .....

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that the issue may be restored to the file of the CIT(A) who may be directed to consider the specific findings of the AO and call a Remand Report if need from the AO before deciding the issue. 6. We have heard the submissions and perused the material available on record. Taking into consideration the order of the Co-ordinate Bench passed while deciding the appeal and thereafter the MA of the Revenue on a consideration thereof we find that the findings arrived at by the CIT(A) in para 3.3 of the .....

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