The Tax Publishers2020 TaxPub(DT) 4600 (Jp-Trib)

INCOME TAX ACT, 1961

Section 145(3)

Addition on account of bogus purchase and GP addition for same default could not be simultaneously made and AO could make addition either on account of unverified purchase or on account of gross profit difference. Therefore, AO was directed to apply G.P rate of 17% and separate addition in respect of unverified purchases deleted.

Accounting method - Rejection - AO made simultaneous addition on account of bogus purchase and GP addition for same default -

AO rejected assessee's books on account of excess stock and unverified purchases and made trading addition by taking gross profit rate @ at 30% as against 13% declared by assessee. Also, AO made separate addition @ 100% appellate proceedings, Tribunal held that GP rate of 17% would meet the ends of justice. Besides Tribunal observed that no separate addition for cash purchases/purchases from unregistered dealers was to be made. Department filed appeal before High Court against this order of Tribunal on the issues of excess stock and unverified purchases. High Court answered the question of excess stock in favour of assessee and remitted back the matter relating to unverifiable purchases to AO. Held: Addition on account of bogus purchase and GP addition for same default could not be simultaneously made and AO could make addition either on account of unverified purchase or on account of gross profit difference. In the first round of appellate proceedings, matter has been considered by High Court wherein in respect of appeal filed by revenue, matter had been decided in favour of assessee and G.P rate as sustained by Tribunal @ 17% was confirmed and the matter has attained finality. Similar was the finding recorded by CIT(A). Therefore, AO was directed to apply G.P rate of 17% and separate addition in respect of unverified purchases deleted.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2003-04, 2004-05 & 2008-09



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