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2019 (9) TMI 367 - AT - Income TaxBogus purchases - estimation of profit - addition @ 12.5% of alleged bogus purchases - HELD THAT:- AO was not able to produce these parties before the authorities below and moreover these parties admitted before Sales Tax authorities that they were indulging in providing bogus bills without supplying material . The assessee could not discharge onus as cast by the provisions of the 1961 Act. Assessee has duly accepted the additions as were sustained by CIT(A) to the tune of 12.5% of alleged bogus purchases to end litigation as no appeal/Co was filed by the assessee challenging the additions as were confirmed/sustained by CIT(A). In such cases, profits embedded in these purchases are to be computed and such estimate has to be honest, fairs and reasonable because purchases are made from some other suppliers operating in grey market without bills while to complete books of accounts, the bills are obtained from the accommodation entry providers without taking physical delivery of material from these entry providers. No infirmity in the appellate order passed by Ld. CIT(A) estimating profits @12.5% of the alleged bogus purchases being profits embedded in these purchases, as additional income to be brought to tax in the hands of the assessee, as some guess work is required in estimating profits embedded in these alleged bogus purchases but the said guess work has to be reasonable , fair and honest guess work . There is not perversity in estimation made by learned CIT(A) nor it is unconscionable estimation and we are not inclined to interfere with appellate order passed by learned CIT(A), more-so the assessee has duly reconciled quantitative stocks reflected by these alleged purchases with sales made. The sales are not doubted by Revenue. The ratio of decision in the case of Kachwala Gems v. JCIT [2006 (12) TMI 83 - SUPREME COURT] supports our decision. Revenue fails in its appeal.
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