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2021 (8) TMI 861 - ITAT MUMBAIBogus purchases - estimation of profit - purchases made from grey market - HELD THAT:- We find that there is no dispute that the assessee had made purchases from tainted suppliers. We find that though these parties had filed an affidavit before the Sales Tax department that they are genuinely engaged in the business, the assessee herein could not prove the genuineness of purchases made from those parties with conclusive evidences. It could be safely concluded that assessee could have made purchases only from grey market in order to have savings from VAT and incidental profit element thereon. It would be just and fair to bring to tax only the profit element embedded in the value of such disputed purchases in as much as the ld. CIT(A) accepted the fact that the goods made by the assessee from the aforesaid suppliers had been actually consumed by it in the projects. For the purpose of determination of profit element embedded in the value of such disputed purchases, since the assessee had made purchases from the grey market, we hold that it could have saved in VAT portion and incidental profit element thereon making cash purchases. AO is directed to determine the profit element embedded in the value of disputed purchases in the aforesaid manner as given in the table. Accordingly, the grounds raised by the assessee as well as by the Revenue are partly allowed.
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