2022 (9) TMI 827 - AT - Income Tax

Estimation of income - bogus purchases - addition of commission on the bogus purchases - HELD THAT:- Recently in Deputy Commissioner of Income-tax v DBM Geotechnics and Construction (P.) Ltd. [2022 (3) TMI 1405 - ITAT MUMBAI] has upheld the income embedded at the rate of 12.5% in such purchases as income of the purchaser.

As profit should be imputed to bogus purchases transactions, we deem it fit and proper that profit is required to be estimated only on the amount of bogus purchases. The quantum of the profit as generally estimated in the cases of bogus purchases should be at the rate of 12% of such purchases as held by the Honourable Jurisdictional High Court and we have not been guided by both the party as to why and how the said view of the Honourable Jurisdictional High Court is not acceptable in the present case. Accordingly, we reverse the order of the learned CIT – A and direct the learned assessing officer to compute the unaccounted profit earned by the assessee at the rate of 12% on bogus purchases.

As we have followed the jurisdictional high court decision where in the court has not guided as to make separate addition on the commission on the bogus purchases and therefore, respectfully following that judgement we do not find any merits in the appeal of the revenue to confirm the addition of commission and thus this ground of the revenue is dismissed and that of the assessee is allowed.