Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Home Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles News Highlights
Extracts
Home List
← Previous Next →

Income Tax Officer Vapi Ward-2, Vapi Versus Sh. Lalit Garg (HUF)

2016 (10) TMI 623 - ITAT AHMEDABAD

Disallowance of purchase on adhoc basis - gp determination - Held that:- We find that the ld.CIT(A) while granting partial relief to the assessee has noted that assessee is trader of wastepaper and purchaser of waster-paper and assessee purchases it from small time vendors and in turn the waste-paper is supplied to the paper-mills. He has further given a finding that the purchase price of waste-paper is fixed by the Gujarat Paper Mills Association and the waste-paper traders have VAT registratio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al Circle Surat had estimated the Gross Profit and enhanced the rate between 0.5% to 0.75%. Considering the totality of the facts, he has given a finding that 15% margin in the trading business is not possible and thereafter he considered that the Net Profit rate could be between 2 to 3% and thereafter estimated the Net Profit rate at 3% as against 2.68% shown by the assessee. Before us, neither the Revenue nor the assessee has placed any material on record to controvert the findings of ld.CIT(A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

relevant facts as culled out from the materials on record are as under:- 2.1. Assessee is a HUF which is stated to be engaged in the business of trading of waste-paper. Assessee filed its return of income for AY 2010-11 on 06/08/2010 declaring total income of ₹ 8,02,130/-. The case was selected for scrutiny and thereafter assessment was framed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 01/03/2013 and the total income was deter .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he other hand, Assessee has raised following ground in its cross objection:- 1. On appreciation of facts and circumstances of the case and law, the learned Commissioner of Income tax (Appeals) had rightly deleted the disallowance of ₹ 49,40,034/- made @15% of total purchases. 2. It is therefore prayed that the order of the Learned Commissioner of Income tax (Appeals) be upheld to the above extent. 3. On appreciation of the facts and circumstances of the case and interpretation of law, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

objection are inter-connected, therefore the same are considered together. 3. During the course of assessment proceedings, on verifying the purchases from the details furnished by the assessee, AO noticed that the purchase vouchers were prima-facie unverifiable because there was no names and addresses of the parties from whom the purchases were made, there was no signatures of the parties in the vouchers, all the payments were made in cash. AO was therefore of the view that purchases were not f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e written submission. The appellant is a trader ion waste paper and is purchasing the waste paper and other similar scraps from small time vendors who are popularly known as raddiwallas. Such raddiwallas collect waste items from difference locations in and around Vapi Industrial town and finally sold the waste paper so collected to the middleman traders like the appellant. The appellant purchase such waste paper collected on a day to day basis, accumulate the same in quantities and thereafter se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e paper mills Association fixed up such purchase price to have a level playing field for the members by ensuring uniform impact of cost of raw materials i.e. waste paper. The waste paper traders like the appellant obtain VAT registration and other required government permissions and disclose to the VAT Department their turnover and other details on a regular basis through mandatory VAT returns and the VAT authorities make an assessment under the VAT law and determine the tax liability on an year .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not brought on record any instance of waste paper purchases made by the customers of the applicant (Paper Mills) as being found to be bogus on inflated. The AO has not disputed the nature of business carried out by the appellant and has not pointed out any instance of tax planning by any paper mills specifically to form an opinion as such. The appellant is a trader in an unorganized sector, the AO has not doubted the sales figure disclosed by the appellant. Considering that the paper mills asso .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1 wherein, the assessment authorities considered all facts of the case which is very similar to the facts of the case of this and have estimate the gross profit and made an addition of 0.5% to 0.75% of the turnover as income on the basis of same facts and issues in dispute. 4.4 The appellant had furnished quantitative details of purchases and stock along with the tax audit return and has disclose a sum of ₹ 17,36,499/- as gross profit (G.P.), which works out to 7% of total turnover. On con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ers like the appellant should comply with the provisions of the income-tax law in maintenance of books of account and other particulars required for the purposes of assessment. In this case, considering the peculiar nature of the business and the modus operandi required for carrying out the business, the inference have to be derived from all the facts in entirety. Admittedly, there is no dispute as regards the quantum of sales. There is no possibility of waste paper traders like the appellant ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

traders by estimating the gross profit and enhanced the rate between 0.5% to '0.75% being the facts similar1 to the appellant. This indicates that this trading activity is high volume low margin business. I have also spared my thoughts on various aspects of the business activities such as (i) what are the items covered under this trade.,(ii) source of waste papers and other items traded by the appellant, (ii) how cost of the goods is determined,(iv) modus operand! of the trading activities, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cumstances, for the sake of justice and fairness, I consider the N.P. rat should apply between 2-3 % depending on the turnover. As mentioned earlier, higher the turnover, the GP/NP is lower. In this case, the appellant had shown GP/NP at 2.35%/2.68% respectively. Thus, applying the general rules, in my considered view, the N.P. is estimated at 3% as against 2,.68% disclosed by the appellant will meet the justice. Accordingly, the AO is directed to adopt NP at the rate 3% for determining the taxa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

identical facts, the Coordinate Bench (ITAT A Bench Ahmedabad) of Tribunal in other cases have estimated the Net Profit at 2%. He placed on record the copy of the decision in the case of ITO vs. Shri Gurfran A.Chaudhari in ITA No.1360 & 1552/Ahd/2012 for AY 2006-07, order dated 11/03/2016 and decision of ITAT B Bench Ahmedabad in the case of ITO vs. Tayab Yunus Barudgar order dated 27/05/2016. 5. We have heard the rival submissions, perused the material available on record and gone through t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ls Association and the waste-paper traders have VAT registration and other required permissions and it files the details of turnover, etc. through the VAT returns before the VAT authorities. He has further noted that AO has not doubted the purchases made by the assessee nor has got on record any instance of waste-paper purchases made by the assessee found to be bogus or inflated. He has further noted that assessee had furnished quantitative details of purchase and stock alongwith tax audit repor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d any material on record to controvert the findings of ld.CIT(A). We further find that on identical issue, in the case of ITO vs. Tayab Yunus Barudgar (ITA No.1351/Ahd/2012 and CO No.155/2012) vide order dated 27/05/2016 the Coordinate Bench of Tribunal had dismissed the ground of Revenue by holding as under:- 4. We have heard the Ld.DR, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) while deciding the issue in favour of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Forum
what is new what is new
  ↓     bird's eye view     ↓  


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version