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2020 (11) TMI 806 - AT - Income TaxUnexplained cash credit u/s. 68 - Bogus purchases - estimation of income - HELD THAT:- AO has not rejected the books of account of the assessee, but has made the addition towards the bogus purchase. The assessee has also made the payment to the party in the subsequent year which is evident from the payment which fact has been noted by the AO. This is not the case where books of account maintained by the assessee has been rejected and the profit has been estimated - assessee has failed to produce documentary evidences in the form of lorry receipts, way bill receipts, octroi receipts etc. The assessee has failed to substantiate the movement of rice from the rice mill to the assessee. So assessee has not been able to show with the support of evidence that it has purchased the rice from M/s. Standard Rice Mills. However, it is significant to note that sales has been accepted by the AO/ department. Without purchases, there cannot be sales. Possibility of the assessee purchasing/trading of rice from other sources and procuring bills from the accommodation entry provider cannot be ruled out. Therefore, entire alleged bogus purchase made from M/s. Satadal Rice Mill cannot be added in the hands of the assessee - estimation of profit from the sale of rice could be justified. In the rice trading G.P of 3 to 5 % is there during the AY under consideration. Therefore, GP addition of 4% would be sufficient to meet the ends of justice .Four percentage of GP would be just and proper. Therefore, direct the AO to make the GP addition of 4 % in place of the addition of ₹ 25,11,404/-. Appeal of assessee is partly allowed.
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