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2018 (12) TMI 1830 - ITAT MUMBAIEstimation of income - Bogus purchases - HELD THAT:- The assessee was in possession of primary purchase documents and was able to reconcile the quantitative details. At the same time, the stated purchases were under grave doubt since the assessee could not produce any of the party to confirm the transactions and the information received from investigation wing revealed that all the suppliers were engaged in carrying out only paper transactions without actual delivery of material. The complete onus to prove the purchases conclusively was on assessee, which has remained un-discharged. In such a scenario, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against alleged bogus purchases, which lower authorities have rightly done. Considering GP rate of 10.59% already reflected by the assessee as well as VAT rate applicable to the goods being dealt with by the assessee, we find the estimation to be on the higher side and therefore, we restrict the same to 3% of alleged bogus purchases of ₹ 1,87,08,961/-. The same comes to ₹ 5,61,269/-. - AO is directed to re-compute the income of the assessee in terms of our above order.
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