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| The Tax Publishers2020 TaxPub(DT) 3381 (Mum-Trib) INCOME TAX ACT, 1961
Section 69
Where assessee could not produce transportation evidences or expenditure incurred on account of transportation in regard to purchases, addition for bogus purchases was justified but sales was not denied out of bogus purchases, which meant that assessee might have purchased from grey market and also saved VAT, thus, reasonable profit on bogus bills was estimated at rate of 5%, instead of 15%.
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Income from undisclosed sources - Addition under section 69 - Estimation of embedded profit on bogus purchase transactions -
AO made addition on alleged bogus purchases by applying profit rate of 12.5% on non-genuine and bogus purchases. Held: It was found that neither AO, nor CIT(A) doubted sales made by assessee out of alleged bogus purchase. Assessee produced all necessary documents in support of purchased transactions such as, purchase invoices, purchase register, sales register, stock register, bank statement evidencing payment made by account payee cheque etc. But it was a fact that assessee could not produce transportation evidences or expenditure incurred on account of transportation in regard to said purchases. Thus, a reasonable profit could be estimated because estimation of profit was on higher side. Since lower authorities admitted that assessee made sales, which was not denied out of bogus purchases, which meant that assessee might have purchased from grey market and also saved VAT. Thus, reasonable profit on bogus bills was estimated at rate of 5%.
REFERRED :
FAVOUR : Partly in assessee's favour
A.Y. :
IN THE ITAT, MUMBAI BENCH
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