Assessee is in the business of manufacturing of Jewellery and in trading of Gems stones . AO has made the addition on the basis of statement made u/s 132(4) of the Act and as well as evidence gathered in the Course of search in respect of bogus bills obtained . Tribunal deleted the entire addition made by the AO on the basis of statement made in the Course of Search. On appeal by the revenue the Court held that average gross profit (GP) rate in assessee’s industry was 12 per cent .Accordingly, High Court directed that wherever profit of assessee was more than 12 per cent, same would not be refunded to assessee but where it was less than 12 per cent, income would be assessed on basis of 12 per cent GP. ( AY. 2004 05 to 2010-11)
CIT v. Clarity Gold (P.) Ltd. (2018) 99 taxmann.com 46/ 259 Taxman 138 ( Raj.) (HC) Editorial : SLP is granted to the revenue; CIT v. Clarity Gold (P.) Ltd. (2018) 259 Taxman 137 (SC)
S. 145 : Method of accounting Search-Statement on oath- Method of accounting- Estimation of income- Manufacturing of Jewellery and in trading of Gemsstones – Bogus purchase bills -Average gross profit – Tribunal deleted the addition- Court held that ,since average gross profit (GP) rate in assessee’s industry was 12 per cent, wherever profit of assessee was more than 12 per cent, same would not be refunded to assessee but where it was less than 12 per cent, income would be assessed on basis of 12 per cent. [S. 153A]