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2021 (3) TMI 216 - AT - Income TaxReopening of assessment u/s 147 - Bogus purchases - estimation of income - HELD THAT:- After processing of return of income under section 143(1) Assessing Officer had received specific information from the Sales Tax Department that certain purchases claimed to have been made by the assessee during the year are non–genuine. Therefore, the Assessing Officer has tangible material in his possession to form a belief regarding escapement of income. Mentioning of a wrong figure in the reasons recorded, therefore, would not invalidate the proceeding. Therefore uphold the validity of re–opening of assessment under section 147. Bogus purchases - added back the profit element embedded in such purchases by estimating it @ 25% - Considering the fact that the disputed goods purchased by the assessee is steel, wherein, as per industry norms, the profit rate varies between 5% and 8% and further, the fact that the assessee has paid applicable VAT on such purchases to the Sales Tax Authorities because of the default made by the selling dealers, disallowance @ 8% of the alleged non–genuine purchases would be fair and reasonable. Accordingly, direct the Assessing Officer to restrict the disallowance to 8% of the non–genuine purchases. The grounds raised by the assessee are partly allowed.
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