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2018 (1) TMI 283 - AT - Income TaxBogus purchases - Held that:- We are of the considered opinion that there could be no sale without purchase of material keeping in view the assessee’s nature of business. The turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee reconciled quantitative details also. However, at the same time, the assessee reflected purchases from seven entities, all of which were controlled by the same group and the assessee could not produce any of the party for confirmation of the transaction. Said group controlled more than 70 entities with the sole objective of providing accommodation bills to the interested person through network of agents. The entities were being managed by the employees / relatives of the said group who were merely name lender and had no knowledge about the business being carried out by these entities. All these factors cast a serious doubt on assessee’s claim. Therefore, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against alleged bogus purchases, which Ld.CIT(A) has rightly done. The assessee has placed reliance on several judicial pronouncements but we find the matter to be a factual one which requires estimation of income. Therefore, on totality of facts, we find the estimation made by Ld. CIT(A) to be on the lower side and hence, we enhance the same to 6% of alleged bogus purchases of ₹ 5,87,40,062/- which comes to ₹ 35,24,404/- - Decided in favour of revenue in part
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