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2018 (1) TMI 506 - AT - Income TaxBogus purchases - purchases from grey market - profit estimation - Held that:- The assessee had not carried out any genuine purchase transactions from the aforementioned parties, but then the fact that the corresponding sales of the goods under consideration stood duly accounted for in the books of accounts of the assessee, had not been doubted by the lower authorities. We are of the considered view that now when the sales of the goods under consideration have duly been routed through the books of the accounts of the assessee, therefore, it could safely be concluded that the assessee had purchased the goods from the open/grey market. CIT(A) had rightly observed that the addition was liable to be restricted only up to the amount of profit margin involved in making of purchases of the goods from the open/grey market. We have given a thoughtful consideration to the observations of the CIT(A) and find that he had by way of a very well reasoned order restricted the addition in the hands of the assessee to the extent of the profit margin relatable to aggregate value of the purchases under consideration. We further find that no infirmity emerges on the part of the CIT(A) by adopting the profit margin at the rate of 12.5% by relying on the judgment of CIT Vs. Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) - Decided against revenue
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