The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) held that the Gross margin can be reduced to 6% from 12% which was determined by the Commissioner of Income Tax [Appeals] CIT(A), considering the totality of the facts and merits of the case.
Bimal Ravjibhai Patel, the assessee, his place was surveyed by the Income Tax Authorities under section 133A of the Income Tax Act and they impounded material of the assessee which contained details pertaining to unaccounted cash income and expenditure. The Assessing Officer (AO) refused to give any benefit of cash expenses as the assessee failed to show the nature of the cash expenses after going through the impounded material.
Law and Procedure for Filing of Appeals
The Assessee filed an appeal to the Commissioner of Income Tax (Appeals) [CIT(A)] which determined the profit of income as 12% after going through impounded material and considering the submissions made by the assessee. Aggrieved by the order of the Commissioner of Income Tax (Appeals) [CIT(A)], an appeal challenging the estimation of a profit margin of 12% was filed by the assessee before ITAT.
The Counsel for the Assessee argued that the Assessee disclosed the income of 10.27 lakhs and also agreed to pay 6% as gross margin instead of paying 12% which was determined by the CIT(A).
Law and Procedure for Filing of Appeals
The two-member Bench comprising Dr. B.R.R. Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) observed that the net income was Rs. 22.92 lakhs and the share of the assessee was 5.73 lakhs. The Tribunal also observed that the assessee disclosed the income of Rs. 10.27 lakhs in the income tax return. The tribunal agreed with the proposition of the assessee to pay 6% of the gross margin considering the totality of the facts.
Therefore, the tribunal held that the gross margin profit should be reduced to 6% instead of 12% which was determined by the CIT(A). The appeal filed by the assessee is partly allowed.
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