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2019 (6) TMI 1080 - AT - Income TaxBogus purchases - estimate the additions @12.5% - HELD THAT:- We find that assessee was in possession of primary purchase documents and the payments to the suppliers was through banking channels. The assessee had established corresponding sales before AO. The books of accounts were audited wherein quantitative details of stock was provided. There could be no sale without actual purchase of material keeping in view the fact that the assessee was engaged in trading activities. At the same time, the assessee failed to produce even a single supplier to confirm the purchase transactions. The delivery of material could not be substantiated. Therefore, in such a situation, the addition, 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. AO, in our opinion, had clinched the issue in the right perspective and was fair enough to estimate the additions @12.5%. Therefore, concurring with the stand of AO, we restore the order of AO. Accordingly, the enhancement of ₹ 72.93 Lacs as made by Ld. first appellate authority stands deleted.
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