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2020 (11) TMI 604 - AT - Income TaxEstimation of income - bogus purchases - GP rate estimation - assessee is a scrap dealer and GP during the year was 4.04% - HELD THAT:- We are in agreement with the finding of the Ld. CIT(A) that it is only the net profit which can be brought to tax and not the entire purchases, however, considering the nature of business of the assessee and the margin on the trading, we find the addition sustained by Ld. CIT(A) is on the higher side and is unreasonable. In such type of cases the normal presumption is that assessee might have purchased the goods from the grey market thereby saving incidental expenses thereby earning a higher profit than the normal profits - it would be fair and reasonable if a rate of 8 % is applied on the said alleged bogus purchases. Accordingly, we direct the AO to apply GP @ 8%. The order of ld CIT(A) is modified, accordingly.
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