TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 623
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.... Assessee is a HUF which is stated to be engaged in the business of trading of waste-paper. Assessee filed its return of income for AY 2010-11 on 06/08/2010 declaring total income of Rs. 8,02,130/-. The case was selected for scrutiny and thereafter assessment was framed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 01/03/2013 and the total income was determined at Rs. 57,42,160/-. Aggrieved by the order of the Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who vide order dated 31/05/2013(in Appeal No.CIT(A)/VLS/193/12-13) granted partial relief to the assessee. Aggrieved by the order of ld.CIT(A), Revenue has raised the following ground:- 1. On the facts and circu....
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.... made, there was no signatures of the parties in the vouchers, all the payments were made in cash. AO was therefore of the view that purchases were not fully verifiable. He accordingly disallowed 15% of the purchases amounting to Rs. 49,40,034/- as being non-verifiable and accordingly made its addition. Aggrieved by the order of AO, assessee carried the matter before the ld.CIT(A), who after considering the submissions of the assessee granted partial relief to the assessee by holding as under:- "4.1 DECISION :- I have considered the observation of the AO in the assessment order as well as the contention raised by the AR of the appellant in the written submission. The appellant is a trader ion waste paper and is purchasing the waste paper a....
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....e proper evidence in support of the total purchases made and according to the AO the nature of waste paper business enables paper mills to reduce their incidence of taxable. Admittedly, the nature of business and all factual aspect of the same have been disclosed by the appellant and has not been disputed by the AO. A.lso, admittedly, the AO has doubted the purchases made by the appellant but has not brought on record any instance of waste paper purchases made by the customers of the applicant (Paper Mills) as being found to be bogus on inflated. The AO has not disputed the nature of business carried out by the appellant and has not pointed out any instance of tax planning by any paper mills specifically to form an opinion as such. The appe....
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....llant are carried on by small time collectors, who belong to unorganized poor section of the society. I agree with the AO to the extent that the traders like the appellant should comply with the provisions of the income-tax law in maintenance of books of account and other particulars required for the purposes of assessment. In this case, considering the peculiar nature of the business and the modus operandi required for carrying out the business, the inference have to be derived from all the facts in entirety. Admittedly, there is no dispute as regards the quantum of sales. There is no possibility of waste paper traders like the appellant acting as conduits for tax planning on behalf of the paper mills. The AO himself has observed that the ....
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....% depending on the turnover. As mentioned earlier, higher the turnover, the GP/NP is lower. In this case, the appellant had shown GP/NP at 2.35%/2.68% respectively. Thus, applying the general rules, in my considered view, the N.P. is estimated at 3% as against 2,.68% disclosed by the appellant will meet the justice. Accordingly, the AO is directed to adopt NP at the rate 3% for determining the taxable income in this case. Thus, this ground of appeal is partly allowed." 4. Aggrieved by the order of ld.CIT(A), Revenue is now in appeal before us and Assessee has raised cross-objections. 4.1. Before us, ld.Sr.DR supported the order of AO. On the other hand, ld.AR reiterated the submissions made before AO and ld.CIT(A) and further submitted t....
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....ssessee found to be bogus or inflated. He has further noted that assessee had furnished quantitative details of purchase and stock alongwith tax audit report and had shown a GP of 7% and that in similar cases, the Central Circle Surat had estimated the Gross Profit and enhanced the rate between 0.5% to 0.75%. Considering the totality of the facts, he has given a finding that 15% margin in the trading business is not possible and thereafter he considered that the Net Profit rate could be between 2 to 3% and thereafter estimated the Net Profit rate at 3% as against 2.68% shown by the assessee. Before us, neither the Revenue nor the assessee has placed any material on record to controvert the findings of ld.CIT(A). We further find that on iden....