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ITAT examined unverifiable purchases from 22 parties where assessee failed to provide conclusive proof. While books of accounts were accepted by AO and historical gross profit rates averaged 1.55% with current year at 1.6%, the Tribunal determined these transactions likely occurred in grey market warranting higher margins. Despite prior assessments under s.143(3) raising no concerns, ITAT estimated a 2.5% profit margin on disputed purchase value as reasonable given the informal nature of transactions. This modified profit estimation approach balanced the established business pattern with appropriate adjustments for unverified grey market dealings. Appeal partially allowed with revised profit computation.
ITAT examined unverifiable purchases from 22 parties where assessee failed to provide conclusive proof. While books of accounts were accepted by AO and historical gross profit rates averaged 1.55% with current year at 1.6%, the Tribunal determined these transactions likely occurred in grey market warranting higher margins. Despite prior assessments under s.143(3) raising no concerns, ITAT estimated a 2.5% profit margin on disputed purchase value as reasonable given the informal nature of transactions. This modified profit estimation approach balanced the established business pattern with appropriate adjustments for unverified grey market dealings. Appeal partially allowed with revised profit computation.
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