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2018 (1) TMI 1527 - AT - Income TaxAddition u/s 40A(3) - cash payments made against purchases from M/s. IFB Agro Industrial Ltd. - HELD THAT:- Issue squarely covered in favour of the assessee by the decision of this Tribunal rendered in assessee’s own case for A.Y. 2008-09 [2016 (9) TMI 1537 - ITAT KOLKATA] held that the assessee has commercial expediency under Rule 6(2) of the West Bengal Rules referred to above to make payments to the credit of M/s. IFB Agro Industries Ltd., Durgapur who is deemed to be an agent of the State Government as such in terms of Rule 6DD(b) and Rule 6DD(k) of the Income Tax Rules, they are exempted and the disallowance made under section 40A(3) of the Act cannot be sustained. We, therefore, answer this issue in favour of the assessee and that the order of the authorities below cannot be sustained Bogus purchases - undisclosed investment of the assessee under section 69B - GP estimation - HELD THAT:- Addition on account of unexplained investment in stock as made by the A.O. under section 69B thus is based on presumption and the same cannot be sustained. In our opinion, the only presumption that can be reasonably drawn in the absence of anything brought on record to show that the quantity purchased by the assessee outside the books of accounts was lying in the closing stock is that the said quantity was sold by the assessee outside the books of accounts and the addition that can justifiably made on this issue is only to the extent of gross profit on such unaccounted sales. We, therefore, modify the impugned order of the Ld. CIT(A) on this issue and direct the A.O. to recompute the addition to be made on this issue by applying GP rate of 8% on the undisclosed sales made by the assessee out of unaccounted purchases. Ground no 8 of the assessee’s appeal is thus partly allowed.
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