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2016 (7) TMI 688 - AT - Income TaxBogus purchase - genuineness & the creditworthiness of the relevant purchase parties not proved - Held that:- The purchases from the supplier parties are not established, however, simultaneously, the sales corresponding to the purchases are not doubted and this obvious contradiction get resolved only when the assessee purchases goods in cash from the open market and supply to the buyer parties. The presumption in such circumstances is that purchases have been made in cash for supplying to the sales parties and at that time unexplained cash has been utilized by the assessee for purchases. The addition is required to be made for such unexplained cash payment made and not for purchases booked in books of account. The supplier parties to whom cheque payments were made for purchases booked in books of account, returns the corresponding cash back to the assessee after deducting certain commission, and this cash is available for making subsequent cash purchases. In such circumstances, only the peak of the unexplained cash utilized in cash purchases can be added to the income of the assessee. Accordingly, we restore the matter back to the file of the Assessing Officer with the direction to compute the peak of the unexplained cash utilized in making cash purchases.
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