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2012 (1) TMI 298 - AT - Income TaxBogus Purchases - Estimation of Income - AO observed that certain sundry creditors are not genuine. Further, he has drawn an inference that the assessee had made purchase in the open market by paying cash and created bogus bills in the name of the nonexistent parties. AO disallowed the amount. A.R. vehemently argued that the assessee had made genuine purchases and therefore the entire amount cannot be added to his income. HELD THAT:- The AO has also rightly come to a conclusion that the books of accounts of the assessee are not correct and are incomplete in the sense that the same do not reflect the actual state of affairs of the assessee and therefore liable to be rejected u/s 145(3). The AO's action is therefore sustained, and the addition is confirmed. Since the AO himself has not doubted the genuineness of the purchase but only had doubted the bills to be bogus/inflated, following the ratio of the decision of the ITAT, Ahmedabad Bench in the case of VIJAY PROTEINS LTD. VERSUS ASSISTANT COMMISSIONER [1996 (1) TMI 144 - ITAT AHMEDABAD-C], 12.5% of the purchases may be added to the income of the assessee. Ground of Assessee - partly allowed. Unexplained Cash Expenses- AO observed that the assessee had claimed motor car and telephone expenses, but he was not able to produce any documents to establish his claim of expenditure only for the purpose of business - HELD THAT:- Assessee has not submitted any materials to establish the genuineness of the expenditure, therefore, additions are confirmed with regard to motor car expenses, depreciation claimed on vehicles and telephone expenses. Decision against Assessee.
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