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2023 (7) TMI 932 - ITAT PUNEEstimation of income - Bogus expenses - contract receipts - assessee actually carried out the contract work of this magnitude but recorded bogus bills towards sub-contract expenses for reducing the amount of profit, instead of actual lower expenses - HELD THAT:- On disallowing the bogus expenses, the actual estimated expenses need to be reduced from the amount of revenue receipts for computing the income. In our considered opinion, the ld. CIT(A) was more than considerate in estimating the profit at 12% on such contract receipts as against the assessee’s normal profit rate from genuine business at 6.51%. The contention of the Department that the full amount, as added by the AO ought to have been upheld, is without merit because it is only the profit element in the contract receipts which can be subjected to tax. The Hon’ble Bombay High Court in Pr. CIT Vs. S.V. Jiwani [2022 (10) TMI 173 - BOMBAY HIGH COURT] has also held to this extent. We, therefore, countenance the view canvassed by the ld. CIT(A).
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