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2017 (10) TMI 1013 - AT - Income TaxAddition @ 3% profit rate on total purchases - bogus purchases - Held that:- We are of the considered view that the CIT(A) had rightly appreciated that the addition in the hands of the assessee was liable to be restricted only as regards the profit element which was embedded in making of purchases by the assessee from the open/grey market. We find that the CIT(A) though was not oblivious of the fact that in respect of bogus purchases made in a normal business, the courts had consistently estimated the profit margin involved in making of purchases from the open/grey market at 12.5% of the value of the bogus purchases, but then, not loosing sight of the fact that unlike those cases, in the trade line of diamond business the profit margin that would be involved would not exceed 3%, thus for the said reason had restricted the addition in the hands of the assessee @ 3% of the aggregate value of the bogus purchases made by the assessee. We have given a thoughtful consideration to the facts of the case and are persuaded to be in agreement with the view so taken by the CIT(A). We thus being of the considered view that the CIT(A) had fairly concluded that the addition in respect of the purchases which were claimed by the assessee to have been made from the aforementioned parties, viz. (i) Prime Star; (ii) Rajan Diamonds; (iii) Mayur Exports; and (iv) Parvati Exports was liable to be restricted to 3% of the aggregate value of the purchases, therefore, find no reason to dislodge the well reasoned order of the CIT(A). We thus, in the backdrop of our aforesaid observations, finding ourselves as being in agreement with the view taken by the CIT(A), therefore, uphold his order.
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