The Tax Publishers2021 TaxPub(DT) 0112 (Mum-Trib)

INCOME TAX ACT, 1961

Section 69C

In case of assessee engaged in the business of manufacturing and trading in pens and ball pens profit from transactions varies with nature of business and no uniform yardstick can be adopted for estimation of such profit and it could be reasonable to estimate the profit embedded in the accommodation entries of bogus purchases @ 12.5% of purchase amount.

Income from undisclosed sources - Addition under section 69C - Bogus purchases transactions - Estimation of profit

Assessee was engaged in the business of manufacturing and trading in pens and ball pens. AO received information from the DGIT (Inv.) Mumbai about accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. Accordingly, AO treated purchases claimed by assessee as non-genuine and took the view that assessee had obtained only accommodation entries without there being any transportation of materials and assessee might have made purchases in the gray market. Accordingly, AO made addition of 15% of purchases under section 69C. Held: Profit from transactions varies with nature of business and no uniform yardstick can be adopted for estimation of such profit and it could be reasonable to estimate the profit embedded in the accommodation entries of bogus purchases @ 12.5% of purchase amount.

Followed:CIT v. Simit (P) Sheth (2013) 356 ITR 451 (Guj) : 2013 TaxPub(DT0 2115 (Guj-HC).

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2011-12



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