Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (8) TMI 1436 - AT - Income TaxAddition of alleged bogus purchases - Ld. first appellate authority reached a conclusion that the assessee miserably failed to lead evidences to substantiate the purchase transactions and therefore, the addition made by Ld. AO was to be confirmed - HELD THAT:- During assessment proceedings, on the basis of material on record as supplied by DGIT (Investigation), the allegations were made by revenue against the assessee that the assessee procured bogus purchase bills from as many as 11 suppliers. Notices issued u/s 133(6) were issued to these suppliers to confirm the transactions, however, the same remained unserved in 10 cases. The field inquiries made by ward inspector established that none of the supplier was existing at the given addresses. The assessee was confronted with all those facts and show caused to produce the suppliers and adduce evidences in support of purchase transactions. However, the assessee could not produce even a single supplier to confirm the transactions and even the initial primary onus casted upon assessee, in this regard, remained undischarged. The assessee was in possession of primary purchase documents and the payments were through banking channels. The books of accounts were audited and the assessee maintained quantitative details of the items being dealt with by him. The sales turnover reflected by the assessee was not disturbed by the revenue. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which lower authorities has rightly done so. However, keeping in view the fact that the assessee was a trader and dealing in low-margin item like metal, which bears a lower VAT rate and also in view of the fact that the assessee had already reflected Gross Profit Rate of more than 4%, the estimation of 12.5% was on the higher side. We estimate the same @2% of alleged bogus purchases - The balance additions stand deleted. Rejection of books of accounts would require no adjudication in view of the fact that Ld. AO has not disturbed any of the financial parameters except to the extent of making addition on account of alleged bogus purchases - No fault could be found in the action of Ld. AO in reopening the case - levy of interest u/s 234, which being mandatory and consequential, would require no adjudication. Appeal allowed in part.
|