Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (8) TMI 1261 - ITAT MUMBAIEstimation of income - bogus purchases - HELD THAT:- Hon’ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [2013 (10) TMI 933 - GUJARAT HIGH COURT held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view has been taken by the Hon’ble Gujarat High Court in the case of CIT v. Simit P. Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] - Simply because the parties were not produced the entire purchases cannot be added as held by the Bombay High Court in the case of CIT v. Nikunj Eximp[2013 (1) TMI 88 - BOMBAY HIGH COURT] We agree with the view of the lower authorities that there should be an estimation of profit element from these purchases and should be estimated reasonably as the assessee could not conclusively prove that the purchases made are from the parties as claimed, especially in the absence of any confirmations from them - keeping in view the nature of business of the assessee i.e. trader in Ferrous and non-Ferrous Metals, it would be justified if the profit element embedded in those purchases are estimated at 4%. Accordingly, we direct the Assessing Officer to estimate the profit element from the non-genuine purchases at 4% for both the Assessment Years i.e., A.Y: 2009-10 and A.Y. 2011-12 and restrict the disallowance of purchases to 4% and compute the income accordingly. Apeals of the assessee partly allowed.
|