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| The Tax Publishers2020 TaxPub(DT) 0117 (Mum-Trib) INCOME TAX ACT, 1961,
Section 69
Though assessee was beneficiary of Hawala purchases from group related to an Individual on whom search was conducted and it was accepted during search that the whole group was engaged in providing bogus billings, but quantum of rate applied by AO was excessive, thus, AO was directed to apply a rate of 3% on bogus purchases.
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Income from undisclosed sources - Addition under section 68 - Bogus purchases - Addition restricted to profit element
AO found that assessee was beneficiary of Hawala purchases. Therefore, the AO applied a rate of 12.5% to bring profit element on the bogus purchases, but the CIT(A) restricted the addition at 8% of the bogus purchases. The assessee's contention was that it had provided all necessary evidences relating to the purchases. Held: The assessee was engaged in business of manufacturing and export of cut and polished diamonds. The assessee was undoubtedly beneficiary of Hawala purchases from group related to an Individual on whom search was conducted and it was candidly accepted during the search that the whole group was engaged in providing bogus billings. The AO had rightly applied rate on bogus purchases. However, quantum of rate applied was excessive and unreasonable in view of the trade of the assessee. Thus, the AO was directed to apply a rate of 3% on bogus purchases.
REFERRED :
FAVOUR : Partly in assessee's favour
A.Y. :
IN THE ITAT, MUMBAI BENCH
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