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2019 (1) TMI 632 - AT - Income TaxBogus purchases - estimation of income - Held that:- The profit element embedded in the impugned purchases are required to be assessed in the hands of the assessee, as the assessee has failed to furnish the stock register and also evidence for receipt and consumption of materials. Since the assessee has exported materials, the receipt of materials cannot be doubted. The possibility is that the assessee might have purchased materials from one party and obtained bills from another party. Accordingly the profit element embedded in the purchase may be added inthe hands of the assessee. CIT(A) has estimated the profit element at 30% which, in our view, is on the higher side. The learned A.R.submitted that the VAT rate applicable to the impugned purchases is 12.5%. Accordingly, by following the ratio rendered in the case of Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) we modify the order passed by the learned CIT(A) and direct the AO to sustain the addition to the extent of 15% of the value of alleged bogus purchases. Appeal filed by the assessee is partly allowed.
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