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2017 (9) TMI 1903 - AT - Income TaxEstimation of income - Bogus purchases - Information received from Sales tax department that certain parties (called hawala parties) are indulging in providing only accommodation bills without actually supplying the materials - AO estimated at 12.50% of the value of purchases - HELD THAT:- There is merit in the inference drawn by the AO that the assessee could have purchased goods from the grey market and obtained the accommodation bills to account for them. In that case, the AO was justified in estimating the profit element involved in the impugned purchases. The assessee had declared G.P rate of 14.23% and 15.58% during the years relevant for AY 2009-10 and 2010-11 respepctively. During the year under consideration, the G.P rate has come down to 9.82%, a reduction of almost 6%. The turnover of the assessee has increased from ₹ 246 lakhs in the immediately preceding year to ₹ 426 lakhs. The increase in turnover may be one of the reasons for the fall in G.P, but another possibility is that the assessee might have inflated impugned purchases also. Hence there is no merit in the claim of the assessee. The tax authorities have estimated the profit that would have been made by the assessee on the value of alleged bogus purchases @ 12.50% and same is reasonable - Decided against assessee.
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