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| The Tax Publishers2020 TaxPub(DT) 2940 (Mum-Trib) INCOME TAX ACT, 1961
Section 69C
As there could be no sale without actual purchase of goods entire purchases could not be treated as bogus therefore, AO was directed to estimate additions against suspicious/unverified purchases @ 1% on net basis, without any other benefit.
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Income from undisclosed sources - Addition under section 69C - Bogus purchases - No dispute as regards corresponding sales--Appropriate estimation of profit for assessee dealing in low-margin commodity like iron and steel
Assessee engaged in trading in iron and steel was found to beneficiary of providers of bogus bills. Accordingly, AO treated entire purchases claimed by assessee as bogus and made addition under section 69C. CIT(A) restricted addition estimating profit to 12.5% with set-off of already declared GP. Held: As there could be no sale without actual purchase of goods considering the fact that quantitative details were placed on record and there was one-on-one correlation of purchase and sale. It could be said that material was in fact purchased from grey market at a lower rate and to cover deficiencies on record, invoices were procured from entry operators to reduce the profit. Accordingly, entire purchases could not be treated as bogus. Further, assessee was dealing in low-margin commodity like iron and steel which attracted lower VAT rate, therefore, estimation of 12.5% with set-off of already declared GP was on higher side and, therefore, AO was directed to estimate additions against suspicious/unverified purchases @ 1% on net basis, without any other benefit.
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2009-10 & 2010-11
INCOME TAX APPELLATE TRIBUNAL RULES, 1963
Rule 34(5)(c)
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