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TMI Blog2019 (5) TMI 1732X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act'). 2. The first issue in this appeal of assessee is against the validity of reopening of assessment by the AO under section 147 of the Act. For this assessee has raised the following ground No.1: - "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO in re-opening the assessment under section 147 of the Income Tax Act, 1961 as the prescribed conditions therein are not satisfied." 3. At the outset, the learned Counsel for the assessee stated that he has instructions from the assessee not to press this ground and accordingly, the same is not pressed. The learned Counsel for the assessee made this statement at B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved, assessee preferred the appeal before CIT(A), who confirmed the addition made by the AO by observing in para 5.7 by following the decision of Hon'ble Gujarat High court in the case of CIT vs. Smith P. Seth (2013) 356 ITR 451 (Guj) by observing as under: - "5.7. Even if materials have been purchased, they are not purchased form these parties and may be in cash from un-disclosed parties. By purchasing from the grey market, the appellant would have benefitted by the savings of taxes. Therefore, in fact and circumstances of the case, in this particular case, it is considered most appropriate to adopt 12.5% profit which can take care of the rotation of capital utilised for such transaction. Hence in the light of finding of the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,879 71,37,430 Add: VAT 3,11,066 1,49,518 8. In view of the above, the learned Counsel for the assessee referred to the judgement of Hon'ble Bombay High Court in the case of PCIT vs. Mohammad Haji Adam & Co. and Ors. in Income Tax Appeal No. 1004 of 2016 and others, dated 11.02.2019, wherein Hon'ble Bombay High Court has affirmed the findings of the Tribunal wherein the GP rate restricted on the additions limited to the extent of bogus purchases. The learned Counsel for the assessee referred to the following para 8 of the judgement which read as under: - "8 In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of Rs. 3,70,78,125/- which comes to Rs. 20,98,621.88 we think it fit to direct the revenue to add Rs. 20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue. 9. In these circumstances, no question of law, therefore, arises. All Income Tax Appeals are dismissed, accordingly. No order as to costs." 9. When these facts were conf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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