INCOME TAX ACT, 1961

Section 68

Income from undisclosed source - Addition under section 68 - Bogus purchases -

Assessee was engaged in the business of Interior Designing & Contractor and declared net profit at 11.48%. Assessee had shown his total income at Rs. 1,18,36,390, AO issued notice to assessee in respect of the details of the parties from whom assessee had made purchases and received advances. After details were so furnished, AO issued notice to parties and after conducting the inquiry and perusal of material on record, AO rejected assessee's book results and estimated the net profit ratio at 20%. CIT(A) and Tribunal deleted the addition. Held: Tribunal found that AO, while estimating the net profit at 20% had proceeded on the basis of stock register, delivery challans of goods, work orders, and there was no application of mind for deriving at the figure of 20%. Tribunal, therefore, found it fit to remand the proceeding to AO. Tribunal had rightly emphasised on the need to scrutinise the relevant aspects while working out the estimation, and not to arrive at the same in a haphazard manner. Tribunal, while disposing of the appeal has not given conclusive findings but had made certain observations to emphasis the need for remand. Therefore, no substantial question of law arose.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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