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2012 (10) TMI 393 - AT - Income TaxAddition on account of sales return – Goods sold by assessee is a branded commodity – Cover Under the regulations of Essential Commodity Act - In search and seizure undisclosed sale bills are seized - Assessee claims huge sales returns – Sales return claimed against profit because of non- acceptance by manufacturer - Held that:- It cannot be assumed that any brand will manufacture defective goods to such an extent. In normal circumstances, assessee cannot be allowed such goods return as claimed. Therefore sale returns claimed by assessee restricted to estimated 5% when the books of accounts are rejected. And undisclosed sales will be worked out accordingly. Case referred back to AO Addition on account of investment on out of books (Uchanti) purchases - The sales rejected as above, are on the basis of seized sale bills during search – And there is no evidence of any purchases outside the books of account – Held that :- Assessee has indulged in wide spread undisclosed sales. No reason is advanced as to how such a huge turn over can be carried out without some undisclosed purchases. In view of ITAT addition was very reasonable addition by AO. Decided in favor of revenue
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