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2017 (3) TMI 1818 - AT - Income TaxBogus purchases - CIT(A) upholding the adhoc addition being 40% - HELD THAT:- Materials were received and sold and duly accounted for and therefore it is not the case where the accommodation entries were taken to suppress the income of the assessee. Purchases made by the assessee stand proved. Disallowance as sustained by the FAA appears to be unreasonable and excessive and therefore cannot be sustained. In order to plug the leakages of revenue due to the possibility of purchasing goods from the gray market as generally the case is and thus savings made on account of sales tax, octroi and other charges, some reasonable addition should be made. Reasonable to sustain the addition @5% of the total purchases to cover and compensate for the saving made by the assessee by making purchases from grey market. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to made the addition @ 5% in place of 40% by the ld CIT of bogus purchases. - Decided partly in favour of assessee.
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