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2020 (1) TMI 10 - AT - Income TaxBogus purchases - addition made by the AO @12.5% - HELD THAT:- The assessee is undoubtedly beneficiary of hawala purchases from the group related to Bhanwarlal Jain on whom search was conducted and it was candidly accepted during the search that the whole group is engaged in providing bogus billings. We partly agree with the view taken by the authorities below that only a rate can be applied to bring the profit element in the bogus purchases to tax. Pertinent to mention that the assessee has filed evidences to prove that the purchases were made and consequent to this the AO has rightly applied the rate on bogus purchases. However, the quantum of rate applied is excessive and unreasonable in view of the trade of the assessee. Rate of profit prevalent in assessee’s trade we are of the view that it would be reasonable if a rate of 3% is applied to the alleged bogus purchases. Accordingly we set aside the order of the CIT(A) and direct the AO to apply a rate of 3% on bogus purchases - Appeal filed by the assessee is partly allowed.
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