2019 (6) TMI 48

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....on of Rs. 23,03,773/- on the basis of estimated gross profit by invoking the provisions of section 145(3) of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 23,03,773/-. 2. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO, in making disallowance of salary and wages amounting to Rs. 36,83,887/-. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the disallowance of Rs. 36,83,887/-." 2. Briefly the facts of the case are that the assessee filed his....

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....sessment proceedings. It was submitted by the ld. AR that when the assessee concern has been held to be a paper concern/entry provider, in that case, GP rate as applicable to a person who is actually involved in a bullion business cannot be applied. It was submitted that the AO has applied GP rate of 0.15% by comparing the assessee's case with that of M/s Mohan Lal Mahendra Kumar Jeweller who is the bullion trader. As against that, as per the finding of the ld. CIT(A) wherein he has held that one of the concerns of the assessee is a paper concern/entry provider, in such a scenario, profit rate as applicable to an entry provider for bullion business should be considered. In this regard, the ld. AR has submitted that in case of Mahesh Khandel....

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.... were rejected. Regarding the estimation of GP rate, it was submitted by the ld DR that the AO has applied the comparable case of M/s Mohan Lal Mahendra Kumar Jeweller which were brought to the notice of the Assessing Officer by the assessee himself and therefore, in the present proceedings, the assessee cannot be allowed to plead that the gross profit rate has been wrongly applied by the AO. It was further submitted that the ld CIT(A) while upholding the findings of the AO has also noticed that one of the concerns of the assessee is a paper concern which further substantiate the reasoning of the AO in rejecting the books of accounts and estimating the gross profit rate. It was further submitted that besides the trading addition, the AO ha....

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....inessman who is actually carrying out bullion business and the right comparison would have been of another entry provider involved in bullion business. 8. For the purposes, the ld. AR has submitted that in case of Mahesh Khandelwal who was an entry provider for gemstones business, the Coordinate Bench (supra) has upheld the NP rate of 0.10% i.e, the estimate of net income @ 10 paisa per hundred. It was submitted that the gemstones business is a high margin business as compared to bullion business and therefore, entry provider in bullion business is accordingly rewarded very less in comparison to gemstones business. It was accordingly submitted that the NP rate of 0.10% applied by the Coordinate Bench in case of Mahesh Khandelwal may be app....