TMI Blog2016 (10) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... %. 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). - I.T.A. No.2073/Ahd/2013 And CO No.22/Ahd/2014 - - - Dated:- 31-8-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER And SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Appellant : Shri James Kurian, Sr.DR For The Respondent : Shri M.K. Patel, AR ORDER PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : This appeal by the Revenue is directed against the order of the Commissioner of Income Tax(Appeals)-Valsad dated 31/05/2013 for the Assessment Year 2010-11 and the assessee is in Cross Objection thereof. 2. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly made its addition. Aggrieved by the order of AO, assessee carried the matter before the ld.CIT(A), who after considering the submissions of the assessee granted partial relief to the assessee by holding as under:- 4.1 DECISION :- I have considered the observation of the AO in the assessment order as well as the contention raised by the AR of the appellant in the 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 sell the same to the end users i.e. paper mills. The paper mills purchases these items in quantities from the market consisting of the traders like the appellant at the first level and raddiwallas in the second level. The purchase price of waste paper is fixed by the Gujarat Paper Mills Association(GPNA) and as pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over 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 consideration of the nature of the business, the Assessing Officer doubted the profitability of the trading results of the appellant. As a result, the AO completed the assessment by disallowing a portion of the purchase value of the appellant. I am of the considered opinion that waste paper collection and supplying the same to the traders like the appellant are carried on by small time collectors, who belong to unorganized poor section of the society. I agree with the AO to the extent that the traders 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions made before AO and ld.CIT(A) and further submitted that ld.CIT(A) ought not to have estimated the Net Profit of the assessee at 3% as against 2.68% disclosed by the assessee. Ld.AR further submitted that on 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 the orders of the authorities below. The issue in the present case is with respect to disallowance of purchase on adhoc basis by the AO. 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 G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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