2017 (10) TMI 773 - AT - Income Tax

Bogus purchase - disallowance at the rate of 25% of the hawala purchase - Held that:- Admittedly, in such type of cases, there is no option but to estimate the profit which depends upon the subjective approach of an individual and the material facts available on record. In the present appeal, the assessee is in the business of civil engineering, engaged in major repairs, maintenance, structural strengthening, water proofing and civil work of residential and office buildings. The assessee declared income of ₹ 60,74,880/- in his return filed on 29/09/2011.

On the basis of information from the Maharashtra Sales Tax Department that the assessee made purchases from bogus entry providers, the addition was made. The assessee could not produce the necessary details like delivery of challans, etc.. As per the Revenue, the assessee used the material at different sites, which was procured from the parties, which are involved in bogus transactions. However, fact remains that unless and until the purchase material is used the project cannot be completed. Assessee did not produce the evidence of genuine purchase, therefore, considering the material facts, we have no option but to estimate the profit. It will meet the end of justice and to put an end to the litigation, if the disallowance is restricted to @ 25% of the bogus purchases. - Decided partly in favour of assessee.