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2017 (8) TMI 276 - AT - Income TaxAddition of bogus purchases - ingenuity of expenditure - Held that:- Under the Income Tax Act only the real income can be taxed by the Revenue. Even if the transaction is not verifiable, the only taxable is the taxable income component, not the entire transaction. The assessee is engaged in the business of trading of Chemicals after considering the rival contention of both the parties, we are of the opinion that in order to fulfill the gap of revenue leakage, the disallowance of reasonable percentage of such impugned purchase would meet the end of justice. Though the case was examined by ld. CIT(A) on the similar line and the ld. CIT(A) sustained the 30% of impugned purchases as per our view the 30% of the impugned purchases is at higher side. Considering the submission of both the parties, the addition is restricted to 12% of total impugned purchases (disputed purchases). The Hon’ble Bombay High Court in CIT vs. Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] held that Revenue is not entitled to bring the entire sales consideration to tax but only the profit attributable to the total unrecorded consideration alone can be subject to tax. In view of the above discussion, we restrict the disallowance to 12% of the total impugned/bogus purchases. - Decided partly in favour of assessee.
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