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TMI Blog2024 (10) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... he finding of our high court taking the industry comparable profit in the case of Clarity Gold [supra] and direct the ld. AO to adopt the Gross Profit @ 5%. As the assessee has already disclosed Gross Profit @ 4.91% balance gross profit to be add @ 0.09% and determine the Income accordingly. Appeal of the assessee is partly allowed. - Shri Sandeep Gosain, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Sh. S. L. Poddar (Adv.) For the Revenue : Sh. A. S. Nehra (Addl. CIT) ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM Captioned assessee aggrieved with the order of the Commissioner of Income Tax (Appeals)-4, Jaipur dated 29/03/2022 [here in after ld. CIT(A) ] for assessment year 2012-13 filed the present appeal. The said order of the ld. CIT(A) arises because the assessee challenged the finding recorded in the order dated 29.12.2019 passed under section 147 r.w.s 143(3) of the Income Tax Act [ for short Act ] by ACIT, Central Circle-03, Jaipur. 2. In this appeal, the assessee has raised following grounds: - 1. The Learned CIT(A) has erred in sustaining the addition of Rs. 11476762/- on account of gross profit by applying GP Rate of 6% against 4.91% declared by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after, the case was reopened u/s. 148 after recording the reasons for satisfaction and obtaining due approval. Notice u/s. 148 was issued on 30.03.2019 which was duly served on the assessee. In response to the statutory notice issued during the proceedings the assessee e-filed the reply. 5. In response to notice u/s 148 the assessee filed e-return declaring the income at Rs. Nil as filed originally u/s 139 of the Income Tax Act, 1961 on 17.03.2013. Thereafter, the assessee requested for providing copy of reasons recorded for reopening of the case u/s. 148. The copy of the reasons recorded for issuing notice u/s. 148 were provided and assessee was required to file information in response to the notice issued. 6. An inquiry was conducted by the investigation wing authorities. During investigation, it was found that various entities were indulged in giving and taking non-genuine accommodation entries in which assessee is one of those beneficiaries which has taken such entry. Thus, as per the information received in possession of the revenue, it was found that the assessee indulged in bogus purchases for the year under consideration from some bogus entities. As per the information, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014-15) has made turnover of Rs. 856 crores in its bank account. As per the information said account was opened on 23.08.2011 in Axis Bank. The aforesaid company was incorporated in September 2010 and declared its activity as trading in metals. The outflows in the said account were exact equivalent to inflows and on same day. Account exhibited unusual transaction pattern of high value rounded amount transfer/RTGS credits from different entities such as listed in the order of the ld. AO. The ld. AO further observed that in all these entities the out flow in the account were to the similar entities. A large number of debits to companies was noticed in the account. After every withdrawal, the account was left with minimal balance. Though account had witnessed transactions with entities into the same line of activity, trend of transactions raised suspicion. 9. The ld. AO further observed that the account had been seen exceptionally high turnover in a short span of time and that too, by recording to and from transactions with the same group of entities in similar trend. Movement of funds among the group accounts pointed to the suspicion that the proceeds might not actually pertain to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence of the concerns which allegedly entered into the said transactions. Therefore, it is the duty of the assessee to satisfy the Assessing Officer regarding the existence of the payee and to establish the genuineness of the payment for business needs. 11. Based on these observations made by the AO the assessment was completed by making addition of Rs. 5,26,48,554/- by disallowing 25% out of alleged bogus purchases and Rs. 31,58,913/- on account of commission paid determining total income at Rs. 5,58,07,470/-. 12. Aggrieved from the order of the ld. AO, assessee has preferred an appeal before the ld. CIT(A) who has after considering the arguments and submission held that the appellant has declared a GP rate of 2.51% in the F Yr. 2010-11, 4.91% in the year under consideration, GP rate of 6.10% in the FY 2012-13 and has declared a GP rate of 6.84% in the FY 2013-14. Thus, he find that though there is an increase in GP rate in the year under consideration as compared to previous year but there is substantial decline in the turnover in the year under consideration than the previous years. It is observed that in the subsequent years the appellant has declared consistently higher GP. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the AO has instead of adding 100% purchases as non-genuine only added a justified percentage of 25%. In last the ld. DR has relied on the recent judgment of the M/s. Clarity Gold in ITA No. 125/2014 delivered by the jurisdictional high court to support his arguments. The ld. DR also relied upon the findings of the following cases laws [2015] 58 taxmann.com 44 (Gujarat) (09-12-2014) Vijay Proteins Ltd. Vs. Commissioner of Income-tax [2002] 125 TAXMAN 763 (RAJ.) Indian Woollen Carpet Factory Vs. Income-tax Appellate Tribunal. [2018] 99 taxmann.com 47 (SC) (09-12-2014) Commissioner of Income-tax Vs. Clarity Gold (P.) Ltd. [1997] 92 TAXMAN 356 (RAJ.) Commissioner of Income-tax Vs. Golcha Properties (P.) LTD. 14. The assessee has challenged the order of the ld CIT(A) in confirming an addition of Rs. 1,14,76,726/- and sustaining commission @ 6% on this sustained addition of Rs. 1,14,76,726/- for an amount of Rs. 6,88,603/-. The ld. AR of the assessee has submitted following written submission against the grounds raised by the assessee: The above matter was recalled because the profit rate applied by Hon'ble Bench in ITAT Order dated 15.09.2022 was of jewelry trade as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted as copy of the relied upon documents were not supplied to the assessee. He has relied upon various judgments to drive home to the various aspects of arguments raised by him. The learned authorised representative took us to the finding paragraph of the order of the ld. CIT(A). Relying on that finding he submitted that the assessee has declared a GP rate of 2.51% in the F. Y. 2010-11, 4.91% in the year under consideration the GP rate is 6.10% in the FY 2012-13 a GP rate of 6.84%. Thus, the ld. CIT(A) find that there is an improvement of GP in the results declared by assessee supported by audited accounts. Based on the GP being in the range of 6% the ld. CIT(A) has arbitrarily adopted GP @ 6% which also not correct, and the AO should be directed to accept the book results. He further referred to the finding of ld. CIT(A) wherein he stated that when the books are rejected and provision of section 145 is invoked, the best course of action is to apply the GP ratio and confirm certain percentage of sales to cover up any leakage of revenue. The profit declared in the year under consideration is higher than the previous year and the same should be accepted as the assessee has shown be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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