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2017 (9) TMI 1218 - ITAT MUMBAIAddition on account of bogus purchases - Held that:- The addition was made on the basis of third party information. Under the Income Tax Act, Income Tax Authorities are entitled to tax the real income. Even if the transactions is not verifiable the only taxable amount is the taxable income component therein and not the entire transactions. We are of the view that in order to fulfill the gap of revenue leakage, the disallowance of reasonable percentage of alleged bogus purchase must meet the ends of justice. Considering the facts of the present case, we restrict the addition @12.5% of the alleged bogus purchases (12.5% of 6,13,952/-). The Hon'ble Bombay High Court in the case of CIT vs. Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] also held that the Revenue is not entitled to treat the entire sale consideration to tax, but only the profit attributable to the total unrecorded sale consideration alone can be subject to tax.
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