TaxTMI 
TaxTMI 
2016 (7) TMI 912
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....d order passed by the Tribunal in ITA No.1195/Ahd/2010 and ITA No.2748/Ahd/2011 by proposing the following two questions, stated to be the substantial questions of law: [A] "Whether on the facts and the circumstance of the case and in law, the ITAT is justified in restricting the disallowance on account of unverifiable purchases merely to 2% of such purchases as against the disallowance @ 10% of such purchase made by the Assessing Officer despite the fact the ITAT agreed with the findings of the Assessing Officer that purchases were from unverifiable sources & assessee itself had admitted that there is possibilities of purchases from unauthorized dealers?" [B] "Whether on the facts and the circumstances of the case and in ....
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....han the preceding year and that during the year the gross profit had increased as compared to the preceding year and similarly the net profit was also much more as compared to the previous year. The Commissioner (Appeals) found that during the year the gross profit rate was 9.01% as compared to 4.92% in the last year and the net profit during the year was 4.57% as compared to 1.17% in the last year. Since the disallowance had been made mostly in the purchases of garments, the Commissioner (Appeals) noted that the gross profit rate in the garments division is also higher at 15.29% as compared to 11.91% in the preceding year. He further noted that the Assessing Officer while disallowing the expenses at the rate of 10% had not given any basis ....
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....ted that these findings of the Assessing Officer have not been controverted either by the Commissioner (Appeals) or by the Tribunal. Under the circumstances, there was no justification for reducing the disallowance made by the Assessing Officer at the rate of 10% of the total purchases which was very reasonable. It was submitted that in the case of Vijay Proteins Ltd v. Commissioner of Income Tax, [2015] 58 taxmann.com 44 (Gujarat), this High Court, in a similar case, has held that disallowance to the extent of 25% is justified. It was, accordingly, urged that the impugned order does give rise to a substantial question of law as proposed or may be formulated by the court. 7. From the facts noted hereinabove, it is evident that the findin....
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....h in his opinion was fair and reasonable. 9. The Commissioner (Appeals) while reducing the disallowance to 2% has recorded that the gross profit rate as well as net profit rate of the assessee was higher as compared to the previous year. That most of the disallowance was in the purchase of garments, whereas the gross profit rate of the garment division was higher at 15.29% as compared to 11.91% in the preceding year. Therefore, while agreeing with the findings of the Assessing Officer, as regards the purchases being non-verifiable, the Commissioner (Appeals) has found it reasonable to keep the disallowance to 2% of the purchases having regard to the higher gross profit rate and higher net profit rate in the year under consideration. Evid....