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2017 (10) TMI 1557 - AT - Income TaxReopening of assessment u/s 147 - bogus purchases - Estimation of income - addition of peak credit in respect of purchases made through suppliers as per information of Sales Tax Department - HELD THAT:- AO has accepted the corresponding sales made by the assessee. Books of Accounts were not rejected. However, he has added the peak credit in respect of such purchases in assessee’s income. By observing that only profit element embedded in bogus purchase which the assessee would have made, should be added in the assessee’s income, the CIT(A) has restricted the addition to 12.5% of such purchases. So far as reopening is concerned, we found that sufficient reasons were recorded by AO and he was justified in reopening the assessment. We found that during the year under consideration the assessee had offered higher GP. GP of last two years of the assessee was at 8.39% and 8.36%. During the year under consideration GP shown by the assessee was 8.83%. Thus, the GP ratio of assessee is not only consistent as compared to the earlier years but even higher. As found that during the course of assessment proceedings, the assessee had submitted the ledger account, tax invoice, bank statements and utilization of goods supplied. Statement of reconciliation of purchases and sales was also filed before the lower authorities. Keeping in view the nature of trade assessee was carrying on vis-à-vis higher G.P. declared during the year and also totality of facts and circumstances of the case, we modify the order of both the lower authorities and upheld the addition to the extent of 2% of the bogus purchases. Decided partly in favour of assessee.
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