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2013 (6) TMI 543 - ITAT AHMEDABADAddition of Income - estimating net profit at 0.5% on turnover by CIT(A) - case was selected for scrutiny under CASS u/s 143(2) - disallowance of 25% of total purchases by the assessee - Held that:- As per CIT(A)'s conclusion all the parties from whom the assessee had made purchases were assessed to tax and were disclosed in their trading account. The parties from whom the assessee had made purchases had only wrongly classified in their books of accounts as loan instead of showing the balance due to the assessee as receivable from the assessee as debtors.In such circumstances, the transactions of the purchases and sales made by the assessee need not be doubted. As during the year the assessee had a turnover of Rs.18.23 Crores with gross profit at 0.04% and net profit at 0.02%. During the subsequent assessment year, the turnover declared was nil and had shown negligible administrative expenses of Rs.46,187/- and had outstanding debtors and creditors. Thus from this it could be inferred that both the purchases and sales are bogus and only book entries. Such transactions are generally made to extend bogus entries to other concerns in order to help them to evade tax or it could be a circular transaction to generate a healthy balance sheet to deceive financial institutions or for other purposes. Thus the income of the assessee could not be to the extent of 25% of unverifiable purchases. Further, drawing support from the decisions of Vijay Protins Ltd. [1996 (1) TMI 144 - ITAT AHMEDABAD-C] net profit could be estimated at 0.05% on the total turnover of Rs.18.23 Crores. All the findings of the CIT(A) is quite reasonable & either parties did not produce any materials on record to dislodge the findings of the CIT(A, thus no hesitation to confirm the order of the CIT(A).
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