The Tax Publishers2020 TaxPub(DT) 4789 (Mum-Trib)

INCOME TAX ACT, 1961

Section 69

Simply because parties were not produced, entire purchases could not be added as income. There should be an estimation of profit element from purchases and should be estimated reasonably, as assessee could not conclusively prove that purchases made were from parties as claimed, especially in absence of any confirmation from them. Considering nature of business of assessee, i.e., trader in iron and steel, profit element embedded in those purchases was estimated at 4%.

Income from undisclosed sources - Bogus purchases - Estimation of profit element embeded in bogus purchases -

Assessee challenged order of CIT(A), upholding action of AO in making an addition being 12.5% of purchases debited to profit and loss account on allegation that said purchases were non-genuine. Held: Simply because parties were not produced, entire purchases cannot be added as income. There should be an estimation of profit element from these purchases and should be estimated reasonably as assessee could not conclusively prove that the purchases made were from parties as claimed, especially in the absence of any confirmation from them. Keeping in view nature of business of assessee, i.e., trader in iron and steel, it would be justified if profit element embedded in those purchases were estimated at 4%.

REFERRED :

FAVOUR : Parlty in assessee's favour

A.Y. : 2009-10



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