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2017 (1) TMI 455 - AT - Income TaxDisallowance of bogus purchases - Held that:- Admitted facts are that the AO neither in the original proceedings nor during remand proceedings objected to sales made by assessee. In that eventuality it is imperative on our part to hold that there must be purchases. Whether the purchases are from Grey Market or whatever the assessee has made purchases although payments are made to hawala dealers. In that eventuality it is to be seen whether the payments are recorded in the books of account or not. This factum is not denied by Revenue, rather the assessee has proved that the payments are made through accounts payee cheques and purchases are entered in its books of account. Once the assessee is able to prove that the purchases were made only in alternative way, the revenue is to estimate the excess profit at a rate. Here, our difference is that 2% is reasonable or some higher profit is to be estimated. We are of the view that the assessee’s gross profit varies from 5% to 8.77%, but these purchases are from Grey Market and its profit element is little higher and accordingly, we direct the Assessing Officer to make further addition of 3 % of the bogus purchases and accordingly estimate the income. We direct the Assessing Officer accordingly. Preliminary expenses written off u/s 35 D (1) - Held that:- The details regarding the public issue expenses in respect of commission, brokerage, other charges for drafting, typing and printing are not available in the records of the revenue i.e. in the order of the AO or the CIT (A). Hence, we are of the view that none of the authorities below have examined this issue in proper perspective. Accordingly, we restore this issue to the file of the Assessing Officer for fresh examination after calling for details of these expenses and accordingly, decide the same as per law.
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