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2022 (6) TMI 404 - AT - Income TaxEstimation of income - bogus purchases - HELD THAT:- When no discreet enquiry has been made by the AO qua the alleged bogus purchases by perusing/rejecting the books of accounts of the assessee rather proceeded to make the addition by taking peak balances of the alleged purchases and at the same time the Ld. CIT(A) has also estimated the addition being the 12.5% of the bogus purchases as gross profit, the view taken by the Ld. CIT(A) is a plausible view which is in consonance with the decision rendered by the Hon’ble Gujarat High Court in the case of Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] and JK Surface Coatings Pvt. Ltd. [2021 (10) TMI 1323 - BOMBAY HIGH COURT] No doubt, the reasoning given by the Ld. CIT(A) to estimate the gross profit at 12.5% is plausible but not in consonance with the past history of the assessee who has gross profit of 6.41% on its actual purchases made during the year under consideration i.e. Rs.11,34,14,455/-. So the gross profit needs to be estimated on the basis of gross profit otherwise being earned by the assessee on genuine purchases. In these circumstances we deem 6.41% as the reasonable gross profit on the gross purchases of Rs.1,55,19,372/- keeping in view the gross profit on genuine purchases. The AO is directed to compute the gross profit of 6.41% on bogus purchases in order to make addition thereof to the assessee.
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