| |
The Tax PublishersITA No. 538/Mum/2019
2021 TaxPub(DT) 2632 (Mum-Trib)INCOME TAX ACT, 1961
Section 69C
Since there was one-to-one co-relation between purchases and the sales, entire amount of purchases could not be added to the income of assessee but only profit element embedded in the transactions could be added to income of assessee. Accordingly, AO was directed to adopt GP ratio of 12.5% on alleged bogus purchases and to restrict addition to that extent.
|
Income from undisclosed sources - Addition under section 69C - Bogus purchases - No dispute as regards corresponding sales
Assessee was found to have booked purchases from Ragini Trading & Investment (P) Ltd. who was identified by ST Department as suspicious and hawala dealers. Accordingly, AO treated entire purchases as claimed by assessee as bogus and made addition under section 69C, however, without disputing corresonding sales. Held: Since there was one to one co-relation between purchases and the sales, entire amount of purchases could not be added to the income of assessee but only profit element embedded in the transactions could be added to income of assessee. Accordingly, AO was directed to adopt GP ratio of 12.5% on alleged bogus purchases and to restrict addition to that extent.
Supported by:CIT v. Simit P. Sheth (2013) 356 ITR 451 (Guj) : (2013) 219 taxman 85 (Mag.) : (2013) 38 Taxmann.com 385 (Guj) : 2013 TaxPub(DT) 2115 (Guj-HC), Ratnagiri Steels (2017) 80 Taxmann.com 265 (Mum-Trib) : 2017 TaxPub(DT) 1134 (Mum-Trib).
REFERRED :
FAVOUR : Partly in assessee favour.
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 14A Rule 8D
 SUBSCRIBE FOR FULL CONTENT
|