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2020 (4) TMI 853 - AT - Income TaxEstimation of income - Bogus purchases - disallowance u/s 69C - assessee categorically contended that the assessee has shown that they have declared gross profit at 10.37% and if the addition at 100% of the alleged bogus purchases is sustained, gross profit would raise to 24.44% and ultimate net profit would raise to 20.61% which is impossible - HELD THAT:- In case the transaction is not verifiable or the parties were failed to prove the entire transaction, only profit embedded in such transaction is liable to be taxed and not the entire transaction. Thus, considering the nature and activities of the assessee and the fact that the lower authorities have recorded that assessee failed to produce sufficient evidence to prove the genuineness, we are of the view that in order to check the possibility of revenue leakage, a reasonable disallowance of purchases / amount / disputed purchases would be sufficient to meet the ends of justice. Therefore, considering the nature of business, the disallowances are restricted to 12.5% of the amount / disputed purchases. The AO is directed accordingly.
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