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| The Tax Publishers2020 TaxPub(DT) 1854 (Mum-Trib) INCOME TAX ACT, 1961
Section 69C
Notice under section 133(6) issued by AO to M/s. K i.e. alleged supplier was not replied to. Further, enquiry by Ward Inspector showed that no purchases were made by assessee from M/s. K. In such a factual scenario. CIT(A) rightly brought to tax the profit @ 12.5% of disputed purchases.
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Income from undisclosed sources - Addition under section 69C - Bogus purchases from M/s. 'K' engaged in issuing bogus bills - CIT(A) brought to tax the profit @ 12.5% of disputed purchases
M/s. K was engaged in the issuing bogus bills and assessee was one of the beneficiaries of such bogus bills. Accordingly, AO made addition of entire purchase amount CIT(A) estimated the suppressed profit to the extent of 12.5% of purchases made from the bogus entities. Further, observing that suppressed profit element are embedded in such purchases, CIT(A) held that it would go to reduce the closing WIP in view of the project completion method followed by assessee. Assessee challenged this.Held: Notice under section 133(6) issued by AO to M/s. K was not replied to. Further, enquiry by Ward Inspector showed that no purchases were made by assessee from M/s. K. In such a factual scenario. CIT(A) rightly brought to tax the profit @ 12.5% of disputed purchases.
Followed:CIT v. Simit P Sheth (2013) 38 taxmann.com 385 (Guj) : 2013 TaxPub(DT) 2115 (Guj-HC) and CIT v. Bholanath Poly Fab (P) Ltd. (2013) 355 ITR 290 (Guj) : 2013 TaxPub(DT) 1852 (Guj-HC).
REFERRED :
FAVOUR : Against the assessee.
A.Y. :
INCOME TAX ACT, 1961
Section 40(a)(i)
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