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Magan Vadhaji Prajapati, Mumbai vs Income Tax Officer Wd 19(2) (3) , Mumbai on 19 September, 2022 cites

M/S. Summit Aviation (P) Ltd.,, New ... vs Ito (Tds), New Delhi on 17 December, 2018

12. Thus, from the above it is evident that the basis on which the coordinate bench of the Tribunal restricted the addition to 12.5% is by considering the percentage of sales tax tried to be saved by the parties engaged in these hawala transactions and the profit margin of the industry. Further, as noted above the said decision of the coordinate bench of the Tribunal was upheld by the Hon‟ble Gujarat High Court in case cited supra. Thus, we are of the considered view that in the present case, the lower authorities though correctly agreed that only profit embedded in the sales could be brought to tax, however, placed reliance upon the aforesaid decision Page | 6 Magan Vadhaji Prajapati ITA No.559/Mum./2022 ITA no.560/Mum./2022 of Hon‟ble Gujarat High Court to restrict the disallowance to 12.5% without appreciating the basis on which such percentage of addition was arrived at in the facts of that case. In the present case, reliable industry data was also not brought on record to prove the prevailing profit margin of the ferrous and non-ferrous industry during the relevant assessment year. Therefore, in view of the aforesaid findings, we deem it fit to modify the impugned order only to the extent that the disallowance on account of bogus purchases should be restricted to the total of rate of VAT applicable during the year under consideration in the State of Maharashtra on the goods traded by the assessee and gross profit earned by the assessee during the year under consideration. We, accordingly, direct the AO to recomputed the disallowance. With the above directions, the sole ground raised in assessee‟s appeal is partly allowed.
Income Tax Appellate Tribunal - Delhi Cites 2 - Cited by 4 - Full Document
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