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TMI Blog2011 (2) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... he turnover so as to confirm the addition to the extent of Rs. 22,81,572/- only on account of suppression of profit by manipulating the purchases. 2. The assessee, in its cross objection, has contended that the ld. CIT(A) has erred, in the absence of any comparable case, in applying the GP rate of 8.5% of the total turnover, particularly when the GP rate declared by the assessee was better than the GP rate assessed for the preceding year. 3. The facts are that the assessee individual is the proprietor of M/s Sita Steel, which is engaged in the business of trading in Iron & Steel Goods. The assessee had made purchases from six parties. The AO carried out verification proceedings. Thereon, the AO observed that regarding one of the parties, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned order, the ld. CIT(A) confirmed the addition made by the AO to the extent of Rs. 22,81,572/-. While doing so, it was observed, inter-alia, that the AO had nowhere disputed that the purchases made by the assesse from the concerned two parties stand reflected in the closing stock; that the AO had erred in disbelieving the assessee's contention regarding the closing stock; that however, the purchases from these two parties had not been confirmed; that therefore, the books of account of the assessee had become highly unreliable; that therefore, the books of account of the assessee required to be rejected and a GP rate was required to be applied to incorporate the likely suppression of profit by the assessee by manipulating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock register was a computerized copy and it could not be relied on, as it was a self-serving piece of evidence; that the assessee has since died on 17.12.2009 and the present assessee, Swaran Lata Sharma is the only legal heir of the assessee and is unaware of any factual aspect of the case. The ld. Counsel for the assessee has also furnished a written Synopsis. It has been contended that there is a distinction between bogus purchases and unverifiable purchases; that the present case is a case of not bogus purchases, but unverifiable purchases, since undisputedly, the said purchases were entered in the stock register maintained by the assessee and were shown as closing stock; that in such a scenario, in keeping with "Kachwala Gems vs. CIT", ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able case or instance has been cited by the ld. CIT(A) to arrive at an estimate of 8.5%, we find the assesse to be justified in contending that an estimate of the Gross Profit be made at the average rate of the preceding three years, i.e., A.Y.'s 2006-07 to 2004-05. The assesse contends that the GP rate shown for A.Y. 20006-07 was 4.88%, whereas as per the assessment made u/s 143(3) of the Act, it would be 5.2%, that the GP rate for A.Y. 2005-06 was shown at 7.34% and that for A.Y. 2004-05 was shown at 7.91%. The AO is directed to apply the Gross Profit estimated at the average rate of the GP in the three preceding assessment years, as available. 9. In the result, the appeal of the department is dismissed and the cross objection filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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