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| The Tax Publishers2019 TaxPub(DT) 2908 (Mum-Trib) INCOME TAX ACT, 1961
Section 69C
In case of diamond business, which assessee was dealing, VAT charges are only 1% and the customs duty, when imported, is about 2%. Keeping in view these tax rates, intention of assessee to save from transaction should be viewed only to the extent of saving from above taxes/levies by indulging in taking accommodation entries. Accordingly, addition under section 69C was restricted to 3% of reported bogus purchases, instead of 9% as made by AO.
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Income from undisclosed sources - Addition under section 69C - Bogus purchases in case of assessee engaged in diamond business - No dispute as regards corresponding sales
Assessee engaged in diamond business was found to have inflated its purchases by taking into account invoices in the names of bogus suppliers, by purchasing goods in grey market at a lower rate and made good the entries with bogus bills to reduce profits. Accordingly, AO made addition under section 69C @ 9% of reported bogus purchases.Held: In case of diamond business, which assessee was dealing, VAT charges are only 1% and the customs duty, when imported, is about 2%. Keeping in view these tax rates, intention of assessee to save from transaction should be viewed only to the extent of saving from above taxes/levies by indulging in taking accommodation entries. Accordingly, addition under section 69C was restricted to 3% of reported bogus purchases, instead of 9% as made by AO.
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 37(1)
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