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2017 (12) TMI 1278 - AT - Income TaxAddition made by applying the profit rate at 12.5% of the bogus purchase - assessee contended that only profit element is higher as the assessee deals in iron and steel and assessee is disclosed profit at 2% - Held that:- We find reasonable profit rate of 5% will meet the end of justice for the reason that the assessee has already declared profit @ 2% on the sale made out of bogus purchases and assessee also filed the proofs of payments of sales tax/ VAT to the Maharashtra Sales Tax Department and once the assessee has paid the Sales Tax/ VAT to the Government, the profit will automatically decline. In view of these reasons, we direct the AO to re-compute income after applying profit rate @ 5% of the bogus purchase and appeal of the assessee is partly allowed.
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