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आदेश/Order
The present appeal has been preferred by the assessee against the order dated 13.02.2024passed by the Ld. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], for the Assessment Year 2021- 22.
The sole issue involved in the present appeal is relating to estimation of profits on the alleged bogus purchases.
-Chd-2024 Shri Jatinder Jain, Ludhiana 2 3. The brief facts of the case are that the Assessee made certain purchases from M/s Diksha Yarn Traders, genuineness of which was doubted by the Assessing Officer (A.O.). Though the case of the Assessee is that the Assessee has duly furnished all the documents to prove the genuineness of the purchases. The Assessing Officer , however, held the same as bogus and estimated the profit element /adhoc disallowance @ 15% of the said purchases and thereby making the addition of Rs. 18,23,918/-. The ld. CIT(A) confirmed the addition so made by the A.O.
It has been held time and again that where the purchases have been made out of the known sources of income and the sales have been accepted, only the profits element embedded in such purchases can be added. The Assessing Officer has estimated the same at the rate of 15%, whereas, the Assessee has offered the NP @ 1.14%
Before us, the ld. Counsel for the Assessee, inter alia, has furnished a data relating to the net profit rate of the Assessee for four consecutive years, the details of which are as under: - Assessment year Net profit rate 2018-19 1.33% 2019-20 1.22% -Chd-2024 Shri Jatinder Jain, Ludhiana 3 2020-21 0.79% 2021-22 1.14%
The average of the aforesaid net profit for four consecutive years come to 01.12%, however, the Assessee has already offered the NP @ 1.14%. In view of this, no additions are warranted in this case. The same are ordered to be deleted.
In the result, the appeal of the Assessee stands allowed.