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2022 (7) TMI 630 - AT - Income TaxEstimation of income - bogus purchases - HELD THAT:- Though the purchases found to be bogus by the Revenue Authorities but sales by the assessee have been accepted as genuine as against these bogus purchases, we are of the considered view that when sales have been accepted being genuine the entire purchases cannot be treated as non genuine to make addition of the entire bogus purchases amount. Hon’ble High Court of Bombay in the case of JK Surface Coatings Pvt. Ltd. (2021 (10) TMI 1323 - BOMBAY HIGH COURT] upheld the view taken by the Tribunal that in such circumstances gross profit should be in the range of 5% to 12.5% as reasonable estimation of profit element embedded in the bogus purchases. Thus in the light of the gross profit in the iron and steel business gross profit @ 10%, which is agreed by both the parties to the appeal, is ordered to be added on the bogus purchases - AO is directed to charge the assessee at the gross profit of 10% on the bogus purchases.
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