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2021 (1) TMI 1136 - AT - Income TaxEstimation of income on bogus purchases - CIT-A directing to make an addition of 5% of unverified purchases - HELD THAT:- As under Income Tax Act only real income can be taxed by the Revenue. We may further note that even in cases where the whole transaction is not verifiable due to various reasons, the only taxable is the taxable income component and not the entire transaction. Hon’ble Bombay High Court in the case of “CIT vs. Hariram Bhambani” [2015 (2) TMI 907 - BOMBAY HIGH COURT] held that the Revenue is not entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sale consideration alone can be subject to income tax. In our view, wherein the allegation bogus purchases, if the assessee is failed to prove the complete transaction beyond doubt, the Assessing Officer is not entitled to make 100% disallowance of purchases without bringing sufficient material on record. In such cases only, profit element embedded in such transaction is liable to be disallowed. Therefore, we affirm the order of ld.CIT(A) - Appeal of the Revenue is dismissed.
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