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2020 (1) TMI 1314 - AT - Income TaxEstimation of income - bogus purchases - FAA estimated @12.5% of alleged bogus purchases - HELD THAT:- Undisputedly the assessee was in possession of primary purchase documents and the payments to the suppliers were through banking channels. The sales turnover achieved by the assessee has not been disputed by the revenue. The books of accounts were subject to audit - assessee miserably failed to substantiate the purchases and could not produce any of the suppliers to confirm the transactions and field inquiries indicated that none of the suppliers was existing at the given addresses. Therefore, the onus casted upon assessee, in this regard, remained undischarged. Thus the additions which could be sustained, would be 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 learned CIT(A) has rightly done. However, keeping in view the fact that the assessee was dealing in thin margin item like iron & steel and the assessee reflected Gross Profit Rate of 3.27%, we estimate the additions @2% of alleged bogus purchases - Appeal stands partly allowed.
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