TaxTMI 
TaxTMI 
2021 (11) TMI 1073
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....er of Income Tax (Appeals)-4, Chennai, dated 15.07.2017 and pertains to assessment year 2014-15. 2. The brief facts of the case are that the assessee, M/s. Ankit Ispat Private Limited, is engaged in the business of manufacturing of mild steel ingots. The assessee filed its return of income for the assessment year 2014-15 on 29.11.2014 declaring total income of Rs. 14,21,370/-. The case was taken up for scrutiny and during the course of assessment proceedings, the AO called upon the assessee to file necessary evidences including bills and vouchers in support of purchase expenses of Rs. 35,55,74,723/-. In response, the AR for the assessee has furnished certain details, however, requested for more time to file further details to justify purch....
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....was high turnover and low net profit, In this regard, we would like to inform you that we are in steel manufacturing sector which was adversely affected because of volatile market prices, low steel demand, government policies and imports from various other countries etc. Hence the resultant impact was on the bottom line (Net profit) of the company." 2.3 It is a discernible fact that the assessee is not able to produce any details pertaining to purchases to be produced for verification during the course of the proceedings. At the same time, considering the business of the assessee and the operations during the year, it cannot be denied that purchases would be made. in view of the same, it is recommended that a portion of the purchases fair....
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....or which was adversely affected because of volatile market prices, low steel demand, and government policies. However, further observed that the assessee has declared gross profit margin of 25.77% for assessment year 2013-14, whereas gross profit margin for impugned assessment year is declined to 23.27%, for which no proper explanation was offered. Therefore, he opined that instead of making additions on disallowance on purchases, it is fair and appropriate to estimate disallowance on the basis of reduction in gross profit declared by the assessee which is at 2.5% and thus, restricted disallowance worked out by the AO to 2.5% of the total turnover which worked out to Rs. 1,32,85,764/-. Accordingly, out of disallowance made by the AO at Rs. ....
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....urchases. 7. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. Facts borne out from records clearly indicate that the assessee could not substantiate purchases debited into P&L account with necessary supporting bills and vouchers. It is also an admitted fact that the assessee has expressed its inability to file necessary bills and vouchers to justify purchases debited into P&L account. Although, the assessee claims that relevant records for impugned assessment year was washed away in floods, but said claim is not substantiated by any evidences. Therefore, we are of the considered view that when the assessee is unable to justify various expenses including purchases with s....