TMI Blog2023 (11) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion arrived by the Ld. CIT(A) in our considered view is found to be reasonable, since the average Gross Profit for the three years comes to 10.77%. CIT(A) has exhaustively discussed the matter and decided the appeal on the basis of finding of the Gujarat High Court in the case of CIT Vs. Simit Sheth ( 2013 (10) TMI 1028 - GUJARAT HIGH COURT ) and other case laws. No distinguishable material has been produced before us by the Revenue, thus the factual position remains the same. Thus we are of the considered view that the Ld. CIT(A) has passed the order judiciously and correctly which does not require any interference and the estimation of gross profit at 12.5% is hereby confirmed. - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Shri Tushar Hemani, Sr. Adv. And Shri Parimalsinh B. Parmar, A.R. For the Revenue : Ms. Neeju Gupta, Sr.D.R. ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These cross appeals are filed by the Assessee and Revenue as against three separate appellate orders all dated 21-01-2021 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad, arising out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same as the income of the assessee and demanded tax thereon. 3. Aggrieved against the same, the assessee filed an appeal before Commissioner (Appeals). The Assessee submitted that the Partnership Firm has carried out construction activity from the year 2012 and the Sandhiya Flora project was under construction for the period 2012-13 to 2017-18. Till March 2016, profit was offered on estimate basis, whereas the sale has taken place in the assessment year 2017-18. Thus the Gross Profit ratio for the Assessment Years 2015-16 to 2017-18 was worked out as follows: M/S MILLENNIUM INFRASTRUCTURE CHART SHOWING GROSS PROFIT Particulars F.Y. 2014-15 F.Y. 2015-16 F.Y. 2016-17 Total Sales - - 474,271,000 474,271,000 Closing W.I.P 263,800,000 480,000,000 300,229,000 300,229,000 Total Income 263,800,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have take place. Since the appellant was in the business of development of real estate, therefore no day to day stock inventory of the raw material consumption is possible to be maintained. Moreover, during the year under consideration it has shown the GP rate of 6.59% on the WIP. However, it is also a fact that the purchases from the aforesaid parties could not be established fully genuine and unverifiable purchases could not be ruled out to a certain extent. 7.8 After careful consideration, it is found that in the case of M. K. Brothers, Hon'ble Gujarat High Court has decided the similar issue in favour of the appellant by saying that there was no evidence that those concerns gave bogus vouchers to the assessee as there was nothing to indicate that any part of the fund given by the assessee to those parties came back to the assessee in any form. Further, in the judgment of Hon'ble Gujarat High Court in the case of CIT Vs. President Industries, the issue involved was with regard to taxation of the whole of the sale proceeds, or of the net profit embedded therein was decided. It is the settled position of law that when the sales are not in doubt then the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) erred in not appreciation the fact that the assessee's claim in respect to expenditure of four parties i.e. Brahmani Traders, Mahakali Trading Co., Perfect Steel Corporation Prince Sales Corporation, were found bogus and during the assessment proceedings the A.O. proved it beyond doubt that no such transactions took place between the assessee and these four parties. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 5. Ld. Senior Counsel Shri Tushar Hemani appearing for the assessee fairly submitted that he is not pressing for the Ground No. 1 namely reopening of assessment, and the other grounds except disallowance of bogus purchases to the extent of 12.5% made by the Ld. CIT(A). The Ld. Senior Counsel submitted that the Gross Profit declared on work-in-progress and sales in respective assessment years can be construed as fair and reasonable parameter in the line of construction business namely 10.98%, 6.59% and 7.16% relating to the Assessment Years 2015-16, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt at construction site under lock and key in godown and was supplied as and when the goods are required by the contractors. The suppliers of materials are working agents since they buy the materials from wholesalers and supply the same to various construction sites. Payments are taken by contractors on behalf of the suppliers. Many a times payments are not made to the suppliers of materials, since the contractor prefer to make payment of that bills and keep the payment for material outstanding. Further if there is any dispute as to quality are rate, payments are halted and given to contractors as per the ratio of the labour or contract work. 7.1. It is seen from the assessment order that the assessee after providing different addresses in invoices and ITR s in the case of M/s. Prince Sales Corporation and M/s. Perfect Steel Corporation. Though the assessee requested to issue notices u/s. 133(6) to the additional two addresses, however the A.O. has not issued summons to the parties. Even in case the sellers who failed to furnish reply to the notices issued by the Assessing Officer, that cannot be a ground to hold that the genuine purchases made by the assessee from them to be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Guj HC): in this case it is held that: Section 143 of the Income-tax Act, 1961. Assessment Additions to income [Purchases from market] - Assessment year 2003-04 - Assessing Officer made addition of entire amount of purchase on ground that concerned suppliers had never supplied goods as named by assessee. Commissioner (Appeals) as well as Tribunal having found that though purchases were not made from parties from whom assessee claimed but such materials were purchased from open market incurring cash payment and bills were procured from various sources, held that only profit element at rate of 12.5 per cent was to be added to income of assessee Whether present case being one of only purchase but not from disclosed sources it would be only profit element embodied in such purchase which could be added in income of assessee and thus, rightly so done by Commissioner (Appeals) and Tribunal - Held, yes [Paras 6 7] [In favour of assessee]. (iii) CIT vs. Bholanath Poly Fab (P) Ltd (2013) 355 ITR 290 (Guj-HC]: in this case it is held that: Section 69 of the Income-tax Act, 1961 Undisclosed investments [Bogus purchases] - Assessment year 2005-06- Assessee was engaged in busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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