The Tax Publishers2021 TaxPub(DT) 0013 (Del-Trib)

INCOME TAX ACT, 1961

Section 69C

Once bogus purchases had gone into profit and loss account, and sales were not doubted, only option left with AO was to make addition of gross profit embedded in bogus purchases. Accordingly, AO was directed to restrict addition to the extent of 9.25% of impugned purchases as assessee had shown gross profit ratio of 9.25% in the year ending March, 2012.

Income from undisclosed sources - Addition under section 69C - Bogus purchases - No dispute as regards corresponding sales

Assessee was found to be beneficiary of Hawala dealers. Accordingly, AO treated entire purchases claimed by assessee as bogus and made addition under section 69C, however, without disputing corresponding sales. Assessee pleaded that in case of bogus purchases, if they were not written off or reduced from closing stock then, necessarily in the sale price same were included and, therefore, only gross profit on the same could be added. Held: Once bogus purchases had gone into profit and loss account, and sales were not doubted, only option left with AO was to make addition of gross profit embedded in bogus purchases. Accordingly, AO was directed to restrict addition to the extent of 9.25% of impugned purchases as assessee had shown gross profit ratio of 9.25% in the year ending March, 2012.

Relied:CIT v. Simit P. Sheth (2013) 356 ITR 451 (Guj) : 2013 TaxPub(DT) 2115 (Guj-HC).

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2012-13



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