TMI Blog2017 (10) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... source material for the said 12.5%. The CIT (A) did not apply his mind to the nature of the business, VAT % and the relatable GP & NP rates of the different businesses. In our view, the GP / NP rate vary from business to business. Profit percentage in construction business is similar to that of the Gold Jewellery business. In our view, it is not proper to adopt some percentage of construction business to the business of Gold Jewellery. Further, it is a well established company and the GP rates are varying from 5.37% (AY 2010-2011) to 10.26% (AY 2012- 2013). In our view, this issue of percentage GP or NP need to revisit the file of the AO. AO is directed to study the relevant details of the company or that of the other good comparable ones a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42/- as interest attributable to advances given for acquisition of property notwithstanding that there were no borrowings made for this purpose and notwithstanding that the appellant had adequate own funds in the form of share capital and reserves to meet no disallowance in this case. 2. Briefly stated relevant facts of the case are that the assessee is engaged in the business of manufacturing of studded gold jewellery and plain gold jewellery. Assessee filed the return of income declaring the total income of ₹ 60.56 lakhs. In the assessment, AO made addition on account of section 14A (Rs. 29,41,329/-) and Bogus purchases (Rs. 14.55 Crs) (rounded off). Regarding the bogus purchases, the case of the Revenue is that the assessee r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustainable and relied heavily on the jurisdictional High Court judgment in the case of CIT vs. Nikunj Eximp Enterprises [2015] (372 ITR 0619) (Bom). Further, CIT (A) held that restricting the addition to 12.5% of the said purchases is reasonable. He relied on the Gujarat High Court judgment in the case of CIT vs. Simit P Sheth [2013] (356 ITR 451) (Guj.) in this regard. Thus, the CIT (A) confirmed the addition of ₹ 1,75,04,222/- being 12.5% of ₹ 14,00,33,775/- and deleted the balance of ₹ 12,25,29,553/- (page 4 of the CIT (A)‟s order is relevant in this regard). Aggrieved with the said decision of CIT (A), assessee is in appeal before the Tribunal by raising the above mentioned grounds. 4. Before us, in connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icious purchases from the said three suppliers. Referring to the said suppliers, Ld DR submitted that these suppliers never were produced for investigation by the AO. Ld DR is of the view that such suppliers and their wrong practices should not be encouraged by granting further relief to the assessee. He also submitted that the assessee buys bills from the marker and the material from grey marker and create required documents to meet the requirements of the law. But the facts in business practice are different. Therefore, Ld DR pleaded for confirming the order of the CIT (A). 6. We have heard both the parties and perused the order of the Revenue Authorities as well as the relevant material placed before us. The issues involved here inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant details of the company or that of the other good comparable ones and decide the issue afresh after granting a reasonable opportunity of being heard to the assessee. Further, AO is also directed to freshly consider the assessee‟s argument of netting of GP already shown in the books relatable to the said bogus purchases as well as the applicable VAT rates to the assessee. On VAT issues, the purchases in the grey market results into loss to the Government treasury. AO shall note that there are number of decisions from this Tribunal denying such netting claims. Accordingly, we direct the AO. Thus, Ground no.1 is partly allowed protanto. 9. Regarding Ground no.2 relating to the disallowance of ₹ 9,15,542/-, it is the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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