2019 (3) TMI 1065 - AT - Income Tax

Tribunal partially allows appeal on non-genuine expenditure addition for AY 2010-11

M/s. Shreenox Synthetics Versus Income Tax Officer-1 (4), KALYAN

M/s. Shreenox Synthetics Versus Income Tax Officer-1 (4), KALYAN - TMI Issues:Appeal against CIT(A) order for AY 2010-11; Ground raised on purchases from M/s. Shreejee Commercial Corporation treated as bogus expenditure.Analysis:The appeal was filed against the CIT(A) order for the assessment year 2010-11. The assessee raised multiple grounds, but during the appeal hearing, the AR requested to decide on the merit of one ground while rejecting the others. Ground No. 6 specifically challenged the addition of Rs. 3,71,263 as non-genuine expenditure from purchases made from M/s. Shreejee Commercial Corporation under section 69C of the Income Tax Act, 1961.Regarding Ground No. 6, the AR referred to a previous tribunal decision in the assessee's case for AY 2011-12, where it was noted that the GP percentage had varied over different assessment years. The tribunal had accepted a GP rate of 3.50% for a specific year with higher turnover. The bench in the present case observed the turnover difference and concluded that a higher GP rate should be adopted compared to the previous year's rate of 3.50%.In response, the AR requested the bench to determine the GP percentage for the current year. The Revenue's representative supported the CIT(A)'s order. The tribunal considered the turnover and GP rates from previous assessment years, noting that as turnover increased, the GP rate slightly decreased. Based on this analysis and previous tribunal decisions, the tribunal decided to adopt a GP rate of 3.84%, calculated as an average of the declared GP rates by the assessee and the adjusted rate after the AO's addition.Consequently, the appeal was partly allowed, and the tribunal pronounced the order on February 1, 2019.