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2023 (6) TMI 559 - AT - Income TaxEstimation of income - bogus purchases treating it as unexplained investment u/s. 69 - GR rate estimation - HELD THAT:- AO while framing assessment had not drawn any adverse inferences as regards the GP rate of 15.30 % that was disclosed by the assessee during the year under consideration. For the reason that in case if the assessee would have only booked bogus expenses in the garb of the impugned purchases, then its GP rate for the year under consideration would have witnessed a steep decline, which is neither the case of the revenue nor a fact discernible from the records before me. Addition in the case of the assessee is liable to be restricted only to the extent of profit which it would have made by procuring the goods at a discounted value from the open /grey market. Quantification of the profit which the assessee would have made by procuring the goods at a discounted value from open/grey market - As decided in Mohhomad Haji Adam & Company [2019 (2) TMI 1632 - BOMBAY HIGH COURT] while upholding the order of the Tribunal, had observed, that the addition in the hands of the assessee as regards the bogus/unproved purchases is to be made to the extent of bringing the G.P rate of such bogus purchases at the same rate of other genuine purchases. Thus addition in the case of the assessee is liable to be restricted only to the extent of the profit which he would have made at a discounted value from the open/grey market as against the value at which the same had been booked by the assessee in its books of accounts, and the quantification of the same shall be done by the A.O in terms of the aforesaid observations.
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