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2017 (8) TMI 1328 - AT - Income TaxAddition of unexplained expenditure - profit estimation - Held that:- As under Income-tax Act, the only real income can be taxed by the Revenue, even if the transaction is not verifiable due to any reason, the only taxable is the taxable income component and not aggregate of the transaction. After considering the fact and nature of business of assessee, we are of the opinion that in order to fulfill the gap of revenue leakage, the disallowance of reasonable percentage of impugned purchases would meet the end of justice. We have noted that neither the AO nor the ld. CIT(A) examined the Gross Profit or Net Profit ratio of assessee for previous or subsequent years. Considering the facts and the circumstances of the case, we are of the opinion that a reasonable disallowance of impugned purchases/ unexplained expenditure @ 12.5% would meet the end of justice. Hence, the AO is directed to restrict the disallowance on account of unexplained expenditure u/s 69C of the Act @ 12.5% of aggregate purchases (Rs. 43,84,048/-) of impugned purchases. With the directions the appeal of the assessee is partly allowed.
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