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2023 (4) TMI 90 - AT - Income TaxBogus purchase made u/s 68 - Whether bogus purchases should be treated as par with the unexplained cash credit under section 68? - HELD THAT:- Admittedly, in the given case, the explanation offered by the assessee about the sum found credited in the books of accounts i.e. received on account of bogus sale and immediately transferred against the bogus purchases after retaining commission, was not found unsatisfactory by the AO. The only source of the income was the commission from the bogus transactions of sales and purchases. Thus, to our understanding the provisions of section 68 of the Act cannot be attracted. See Alag Securities (P.) Ltd [2020 (6) TMI 304 - BOMBAY HIGH COURT] Assessee being engaged in the circular transactions/ one of conduit in accommodation entries can be made subject to tax based on real income theory. It is for the reason that the assessee was not the beneficiary of the amount received by it on the sales made to the KGN Industries Ltd. As such the amount of sales received by the assessee was utilized against the purchases from M/s Biotor Industries Ltd. There cannot be any addition under section 68 of the Act in the given facts and circumstances for the bogus purchases shown by the assessee. What best can be added in the given facts and circumstances is the real income which has been earned by the assessee. To determine the real income, there is no standard formula prescribed under the provisions of law. We direct the AO to delete the addition made by him. Hence, the ground of appeal of the revenue is hereby dismissed.
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