INCOME TAX ACT, 1961

Section 143(3) r/w Section 147

Assessment - Estimation of income - Bogus purchases to the extent of 5% - Substantial question of law

On the basis of the information received from Sales Tax Department that assessee had made bogus purchases from M/s. F, the case was re-opened under section 147. During the course of the assessment proceedings, further information was received that the assessee had made bogus purchases from 5 other parties. AO also noticed that the assessee had obtained unsecured loan and there was difference in the amount of VAT paid by assessee compared to taxable purchases. AO took the view that the genuineness of such purchases could not be established as the parties/suppliers were not found or rather non-existing at the addresses furnished by assessee. AO made addition on account of the bogus purchases. Tribunal partly allowed the appeal of the assessee by holding that ad hoc addition at the rate of 5% of such purchases would meet with the ends of justice. Held: If the Appellate Tribunal in the overall facts of the case and having regard to the materials on record thought fit to make ad hoc addition at the rate of 5% of bogus purchases, then, Tribunal could not be said to have committed any serious error warranting any interference in this appeal. Therefore, the question as proposed by Revenue cannot be termed as substantial question of law.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2011-12

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