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2020 (5) TMI 695 - AT - Income TaxEstimation of income - Bogus purchases - CIT(A) has sustained the addition made by the AO on estimating @ 16% of the alleged bogus purchases - HELD THAT:- ITAT Mumbai Bench in the case of Heeramaneck & Son [2018 (12) TMI 1830 - ITAT MUMBAI] 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. However, 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. Thus as assessee has already declared GP ratio from the purchases made from Om Corporation and others respectively. We notice from the financial statement that assessee has declared GP of 15.60% and we do not know how much GP, assessee has earned out of the disputed purchases. Therefore, we are inclined to direct the AO to estimate the income @ 3% of the alleged purchases. Accordingly, we direct the AO to estimate the income of the assessee @ 3% of the alleged purchases. - Decided partly in favour of assessee.
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