Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (9) TMI 2018 - ITAT MUMBAIEstimation of income - bogus purchases - HELD THAT:- We notice that the assessee has purchased various items from the suspicious dealers and the same was consumed in various orders. Accordingly it was submitted that the assessee could not maintain stock register. As already observed that, in the absence of stock register, it would be difficult to prove the consumption of materials. Hence we are unable to understand as to how the CIT(A) has held that the assessee has proved the consumption. In our view, the submission of the assessee that it would be difficult to maintain stock register in this kind of trade cannot be rejected altogether. Hence there is merit in the view taken by Ld CIT(A) that the profit element embedded in the impugned purchases alone should be assessed to tax. Since the suppliers have accepted that they have not actually supplied goods, the natural corollary is that the assessee might have purchased goods from some other source. In that case the inference is that the assessee might have made profit in such purchases by inflating the purchase bills. In fact, it is the case of the sales tax department that the suspicious dealers have not paid VAT tax. Hence there is a possibility that the assessee might have saved VAT tax and also obtained some discount in purchase price. The vat rates applicable to the purchases made by the assessee are 5% and 12.5% depending upon the product. We notice that the G.P rate of the assessee has also fallen down, i.e., in AY 2008-09, the G.P rate was shown at 24.94% and the same has fallen down to 23.76% in AY 2009-10, to 17.24% in AY 2010-11 and to 21.66% in AY 2011-12. In AY 2012-13, the G.P rate has again risen to 27.73%. The reduction in G.P rates, inter alia, supports the case of the revenue that there might be inflation of purchase rates. Thus the profit is generally made at Gross profit level and hence the Ld CIT(A) was not justified in adopting N.P rate for sustaining the addition - Addition may be sustained at 12.50%. Accordingly, we modify the orders passed by Ld CIT(A) and direct the AO to sustain addition to the extent of 12.50% of the value of alleged bogus purchases in all the three years under consideration. Appeals of the revenue are partly allowed
|