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2016 (1) TMI 606 - AT - Income TaxBogus purchases - G.P. addition - Held that:- As there is no justification for adding the entire amount of purchases in assessee’s income. The CIT(A) has even though deleted the purchases but has made an adhoc addition of 10% of the purchase amount. The CIT(A) has also directed the AO to uphold the addition to the extent of difference between GP as per books of account on undisputed purchases and the GP on sales relating to purchases from these three parties. However, no justification has been given by the CIT(A) for upholding the adhoc addition of 10% of the purchase, insofar as quantitative tally of purchase and sales were not in dispute. Accordingly, we direct the AO to delete the adhoc addition of 10% made on the amount of bogus purchases. However, we upheld the addition to the extent of difference in GP as per books of account on undisputed purchase as compared to the GP on the sales relating to the purchases from three parties. Accordingly, we direct the AO to calculate the GP on the undisputed purchase vis-à-vis GP in respect of purchase made from these parties and, if the AO finds that the GP disclosed in respect of purchases from these three parties is lower than the GP disclosed in respect of other undisputed purchase, addition should be made to that extent only. We direct accordingly. - Decided partly in favour of assessee
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