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Income Tax Appellate Tribunal, “SMC”, BENCH
Before: SHRI R.C.SHARMAShri Naresh Ravilal Dedhia,
आदेश / O R D E R PER: R.C. SHARMA, A.M. This is the appeal filed by the revenue against the order of the ld. CIT(A)-38, Mumbai dated 09/08/2018 for the A.Y. 2010-11 in the matter of order passed U/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act).
I have gone through the orders of the authorities below and found that the assessee is in an individual and engaged in manufacturing of PVC material and hardware. The A.O. reopened assessment on getting information from the Sales Tax Department that the assessee has taken accommodation purchase bills. The A.O. added 100% of such purchases.
By the impugned order, the ld. CIT(A) has restricted the addition to the extent of 25% of such purchases by observing as under:-
“5.3.5 The Hon'ble High Courts have adopted estimation of varying percentages to arrive at the profit embedded in such transactions depending upon the nature of business as laid down by the Hon'ble High Court of Gujarat in the case of Simit P. Seth reported in 356 ITR 451 and in the case of CIT vs. M/s. Bholanath Polyfab Pvt Ltd (2013) reported in 355 ITR 290. As per the details, submitted by the appellant it is observed that the average gross profit ratio is 21.57% (22.4 + 20.74%) for A.Y. 2008-09 & 2009-10 wherein the issue of bogus purchase has not been found while the gross profit ratio for the instant assessment year is 20.91% and net profit % is 8.52%. Taking into account the above average gross profit of 21.57%, inflated purchases recorded in the books of the appellant, cost saving benefits availed in procuring the goods from the grey market, and entire facts and circumstances of the case, in my considered opinion computing the profit @ 25% would be justified. Hence the profit is worked out at Rs.75,010/- (25/ 100 X 3,00,039). The AO is directed to restrict the addition to Rs. 75,010/- as against Rs. 3,00,039/- The grounds of appeal at 2.1 to 2.5 & 2.7 are accordingly Partly Allowed.”
It is clear from the order of the ld. CIT(A) that while reducing addition to the extent of 25%, the ld. CIT(A) has properly appreciated the facts which shows that the assessee is showing G.P. of 20.91% and N.P. of 8.52%. It was further observed that the average G.P. of the assessee is 21.57%. After considering all these facts and circumstances, the ld. CIT(A) has restricted the addition to the extent of 25%. Nothing was the ld. CIT(A). Accordingly, I confirm the order of the ld. CIT(A).
In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 04th February, 2020.