9911796707
TMI Blog2025 (5) TMI 1663X X X X Extracts X X X X X X X X Extracts X X X X ..... following grounds of appeal:- "1. On the facts and in the circumstances of the case the CIT Appeal has erred both on facts and in law in issuing the impugned order illegally, violating the principles of natural justice, without fair and objective application of mind to the facts of the case and the law applicable and without being guided by the binding decisions of courts and tribunals and hence liable to be set aside and quashed and declared non est. in law. 2. On the facts and circumstances of the case, the CIT Appeal has erred, both on facts and in law, in making additions to the returned income of the appellant at income of Rs. 30735264/- as against the income of Rs. 4,57,403 /- declared by the appellant. 3. That, on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by not providing opportunity for cross- examination of the person, whose statements have been relied upon by the CIT APPEAL. 10. That, on the facts and in the circumstances of the case, the CIT Appeal was wrong in ignoring the facts, mandatory CBDT instructions and passing the order with pre-conceived notion and non-application of independent mind." 3. The brief facts of the case are that during the course of assessment proceedings, the Assessing Officer observed that the assessee had shown total purchases of Rs. 25,73,98,240/-, however, out of these purchases total purchases of Rs. 23,48,12,550/- were not verifiable since the assessee failed to produce proper evidences in respect of three parties from whom the above purchases were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce not applicable to the assessee's set of facts. Further, the assessee placed reliance on the decision of Gujarat High Court and submitted that the Net Profit should be estimated @ 2% instead of 12%. The Ld. CIT(A) was of the view that in the instant case, the assessee failed to prove the genuineness of the purchase transactions. However, the Ld. CIT(A) was of the view that the Assessing Officer should have estimated the Net Profit rate of 12% on the bogus purchases only and not on the entire turnover of the assessee. Accordingly, Ld. CIT(A) restricted the addition to Rs. 2,34,81,255/- (12% of bogus purchases amounting to Rs. 23,48,12,550/- and excluded the Net Profit disclosed by the assessee). Accordingly, the assessee was allowed a rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover of the assessee had increased by more than 70 times during the year under consideration as compared to the previous year and hence the profit ratio had also accordingly fallen. The Counsel for the assessee submitted that the assessee is operating on high volume and low profit margin basis. The Counsel for the assessee submitted that against a turnover of 5.5 lakhs in 2018, the assessee's turnover had increased to 25.99 crores during the year under consideration. Accordingly, it was highly unjustified to have applied a net profit rate at 12% looking into the assessee's set of facts. Further, the Counsel for the assessee submitted that in the instant facts, no justification has been given as to why the net profit rate of 12% was app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precedents in which the net profit rate of 1% to 2% had been taken by various Courts / Tribunals. However, while passing the order, Ld. CIT(A) did not give any specific finding on the applicability / non-applicability of the judicial precedents relied upon by the assessee. Further, we also note that it is a well-settled law that just because the parties from whom purchases have been made are unverifiable does not mean that the purchases itself are bogus, specifically when the figure of sale / turnover have not been disputed by the Tax Authorities. Accordingly, in light of the above observations, in the interest of justice, the matter is hereby restored to the file of Ld. CIT(A) to give a specific finding on assessee's challenge to rejection ..... X X X X Extracts X X X X X X X X Extracts X X X X
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