| The Tax Publishers2019 TaxPub(DT) 8454 (Mum-Trib) INCOME TAX ACT, 1961
Section 69C
Where CIT(A) has recorded a factual finding that assessee had effected corresponding sales against the purchases and held that addition of the entire non-genuine purchases could not be made, therefore, profit estimated @ 12.5% of the non-genuine purchases could reasonably be considered for the purpose of addition.
|
Income from undisclosed sources - Addition under section 69C - Addition towards bogus purchases - Addition limited to profit element
Assessee was carrying on business as re-seller in ball bearing, hardware and general merchandise. Subsequently, on the basis of information received from Sales Tax Department that assessee was a beneficiary of accommodation bills provided by some parties in respect of alleged purchases and AO called upon assessee to prove genuineness of purchases. In response to query raised by AO, assessee furnished copies of purchase bills, bills of corresponding sales, delivery challans, transport bills, loan confirmation, etc. However, assessee could not submit Octroi receipts since the goods were not subject to Octroi. AO observed that assessee was unable to furnish day-to-day stock account and could only furnish year end closing stock inventory with value of closing stock. AO held that purchases were not genuine, hence, were to be treated as unexplained expenditure under section 69C. Held: No adverse inference of AO vis-a-vis documentary evidence furnished by assessee was discernible from assessment order. Further, assessee had furnished quantitative details of purchases and sales both before AO as well as CIT(A). CIT(A) had recorded a factual finding that the assessee had effected corresponding sales against the purchases and held that addition of the entire non-genuine purchases cannot be made. Because in absence of purchases, assessee could not have effected the corresponding sales. In such circumstances, one can come to a logical conclusion that assessee must have purchased the goods from grey market to avoid payment of Sales Tax / VAT and to regularize such purchases, assessee might have obtained accommodation bills from hawala operators. Therefore, profit estimated @ 12.5% of the non-genuine purchases could reasonably be considered for the purpose of addition.
REFERRED :
FAVOUR : Partly in assessee's favour
A.Y. : 2011-12
IN THE ITAT, MUMBAI BENCH
 SUBSCRIBE FOR FULL CONTENT
OR Try Reload the Page |