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2016 (8) TMI 372 - PUNJAB AND HARYANA HIGH COURT

2016 (8) TMI 372 - PUNJAB AND HARYANA HIGH COURT - TMI - GP estimation - rejection of books of accounts - Held that:- On the rejection of the books of accounts on the ground that an assessee had returned low gross profit percentage, it is open to the authorities to ascertain the correct GP rate. - In such circumstances, the adoption of the GP rate instead of adding of ₹ 1.32 crores to the income of the assessee cannot be said to be perverse or irrational. The CIT(Appeals) had the GP ra .....

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f assessees at Jalandhar as the assessee in the case before us also carried on the business at Jalandhar. The Tribunal observed that the CIT (Appeals) had fixed the GP rate of 25% which was not based on any material or cogent reasoning. This finding of the Tribunal is based on facts which is neither perverse nor absurd. - Income Tax Appeal No. 67 of 2014 (O&M) - Dated:- 8-8-2016 - MR. S.J.VAZIFDAR AND MR. DEEPAK SIBAL, JJ. FOR THE APPELLANT : Mr. Vivek Sethi, Advocate FOR THE RESPONDENT : Mr. Ro .....

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g Officer making an addition of about ₹ 1.32 crores to the respondent-assessee s returned income on account of bogus purchases claimed by it in order to reduce its G.P. and evade payment of taxes. The matter pertains to the assessment year 2009-10. 2. The appeal is admitted on the following substantial questions of law:- (i) Whether on the facts and in the circumstances of the case and in law, having given a findings in para 12.1 that the purchases were bogus and that the assessee had crea .....

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of the case and in law the Hon ble ITAT was justified in estimating G.P. rate of the assessee ignoring the fact that in view of the specific investigation done, the past history and comparable cases were not entirely relevant to the present case while deciding the issue. It is not necessary to answer the other two questions raised in the appeal. 3. The assessee filed a return of income declaring an income of ₹ 93,513/-. The Assessing Officer rejected the books of accounts under section 145 .....

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bout ₹ 2.23 crores against purchases of an aggregate amount of about ₹ 3.85 crores were shown. A questionnaire was issued on 29.09.2010 to furnish the confirmation of creditors of over ₹ 50,000/- alongwith their PAN numbers and addresses. The confirmation was not furnished in respect of five creditors. There were also discrepancies in the books of accounts in respect of four creditors. The assessee was given sufficient time to show cause in this regard. The Assessing Officer al .....

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in the sum of ₹ 1.32 crores. The respondent on the other hand challenged the G.P. rate of 25% adopted by CIT (Appeals). The Tribunal adopted the G.P. rate of 12.38%. 4. Section 144 of the Income Tax Act,1961 in so far as it is relevant reads as under:- Best judgment assessment: 144. (1) If any person- (a) fails to make the return required under subsection (1) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or (b) fails .....

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income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment : (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as .....

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