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2018 (7) TMI 752 - AT - Income TaxBogus purchases - estimation of income - Held that:- The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee was in possession of primary purchases documents. At the same time, the assessee could not conclusively substantiate the purchases made by him and failed to produce any of the party to confirm the transactions. Notices issued u/s 133(6) elicited no satisfactory response. Assessee was confronted with the adverse material during assessment proceedings. The delivery of material could not be substantiated by the assessee. All these factors, in our opinion, cast a serious doubt on assessee’s claim. CIT(A) erred in giving full relief to the assessee by observing that the cross examination was not provided to the assessee whereas the assessee could not discharge the primary onus of proving the transactions beyond doubt. The adverse material, as available on record was duly confronted to the assessee whereas the assessee could not substantiate delivery of material and also could not produce any of the four parties to confirm the transactions. Addition, in our opinion, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases. We estimate the same @12.5% of alleged bogus purchases of ₹ 35,54,956/- which comes to ₹ 4,44,370/-. The addition to that extent stand confirmed by us. The revenue’s appeal stand partly allowed.
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