TMI Blog2023 (2) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... perated by the assessee and considering the fact that the stock registers furnished by the assessee were not disputed by the revenue, we hold that adoption of gross profit percentage of 15% less gross profit declared by the assessee at 10.75% would meet the ends of justice in the peculiar facts and circumstances of the instant case. Accordingly, the ground numbers raised by the assessee and ground raised by the revenue are partly allowed. - ITA No.3282/Mum/2022 & ITA No.3283/Mum/2022 ITA No.2851/Mum/2022 & ITA No.2852/Mum/2022 - - - Dated:- 24-2-2023 - SHRI VIKAS AWASTHY , JUDICIAL MEMBER And SHRI M.BALAGANESH , ACCOUNTANT MEMBER For the Assessee : Shri Madhur Agarwal / Shri Pankaj Jain For the Revenue : Ms. Richa Gulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. The return of income for the assessment year 2012-13 was filed by the assessee on 29.09.2012 declaring total income of ₹ 29,45,08,810/-. The assessment was completed under section 143(3) of the Act on 24.02.2015 determining total income of the assessee at ₹ 29,45,52,740/-. Later the assessment was reopened under section 147 of the Act on the basis of information received from the Deputy Director of Income Tax (Investigation), Karnal regarding certain ingenuine purchases made by the assessee. The modus operandi followed by the assessee is that the assessee procures paddy and rice from local farmers/APMC in Punjab, Haryana and Uttar Pradesh. The rice purchased is sorted and superior quality is exported outside India. The rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 4,57,11,920/- respectively and held that the genuineness of the same were not proved by the assessee and hence the same being reflected in the closing stock of the assessee has no relevance as it is merely a book entry. Accordingly, the learned AO proceeded to add the total purchases from these 2 parties amounting to ₹ 8,99,86,418/- as bogus and made addition under section 69C of the Act. However, the ld. AO stated that books of accounts have been rejected by him and addition has been made only on gross profit basis. Accordingly, no addition was made separately for this ingenuine purchases. The learned AO observed that assessee has been making domestic sales as well as export sales. The overall gross profit offered by the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the remaining sales also. Hence the entire observations made by the learned AO as stated supra would become irrelevant. In our considered opinion, the application of common gross profit percentage of 34% on entire sales by the learned AO is completely without any basis and only proves his complete non-application of mind and not understanding the business model of the assessee. Obviously once the rice once sorted out into various grades for export quality, it would fetch huge margins for the assessee and the non-exportable quality rice would be sold only in the local market most of the times at a loss. The main purpose of assessee s existence is to cater to the export market which is evident from the fact that 70% of sales are made to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss profit only. The learned CIT(A) observed that the truck numbers mentioned in respect of the purchases made from two suppliers were either non-existent or were in respect of a non-transport vehicles. Since no cogent evidences were filed by the assessee in this regard to controvert this finding of the learned AO, the learned CIT(A) upheld the action of the learned AO in treating the purchases made in the sum of Rs 8,99,86,418/- as bogus and then proceeded to add only the profit embedded in the value of such disputed purchases. The learned CIT(A) estimated the profit percentage at 15%. Aggrieved by this, both assessee as well as the revenue are in appeal before us. 3.5. It is not in dispute that the assessee had declared gross profit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the materials available on record. The facts of the case of Assessment Year 2013-14 are identical to that of Assessment Year 2012-13 and hence the decision rendered hereinabove for Assessment Year 2012-13 shall apply mutatis mutandis except with variance in figures and double addition made in Assessment Year 2013-14. Accordingly, the ground numbers 2 3 raised by the assessee and ground raised by the revenue are partly allowed. 7. In the result, both the appeals of the assessee as well as the revenue are partly allowed for Assessment Year 2013-14. 8. To sum up, all the appeals of the assessee as well as the revenue are partly allowed. Order pronounced on 24/02/2023 by way of proper mentioning in the notice board. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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