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2017 (11) TMI 211 - ITAT MUMBAIAddition on account of bogus purchases - Held that:- Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [2013 (10) TMI 933 - GUJARAT HIGH COURT] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Keeping in view the nature of business of the assessee and the fact that the assessee is making some local purchases without any transportation bills lorry receipts etc, the possibility of making purchases in gray market on cash cannot be ruled out. Therefore, keeping in view the net profit rate shown by the assessee at 7.41% and the totality of facts and circumstances into consideration we direct the Assessing Officer to disallow 5% of the above purchases to meet the anomalies and could cover up the leakages of Revenue. Appeal of the Revenue is partly allowed.
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