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2023 (9) TMI 149 - AT - Income TaxEstimation of income - Bogus purchases - assessee before the CIT(A) submitted copies of confirmations from all three entities and copies of relevant bills and ITR and also filed stock statement, purchase and sale registers and bank statement for FY 2015-16 showing that all transactions of purchases have been included in the purchases shown in the P&L account and payments have been made through banking channels - HELD THAT:- In absence of any positive and adverse material against the assessee showing and establishing above facts, no addition can be made in the hands of assessee on account of allege bogus purchases u/s. 68 of the Act or any other charging section of the Act and on account of commission payment. However, to cover up all possible leakage of revenue, we find it appropriate to follow the preposition rendered in the case of PCIT vs. Mohd. Hazi Adam [2019 (2) TMI 1632 - BOMBAY HIGH COURT] and restrict the addition to the element of profit embedded therein. GP rate declared by the assessee as per audited accounts may be a relevant fact but the same is not suffice to meet the requirement of tax proceedings. Therefore find it appropriate to restrict the addition to the tune of 8% of total impugned sales which is sufficient to cover all possible leakage of revenue.Additions upheld by the ld. CIT(A) are substituted by the 8% of total alleged purchases. Appeal of assessee is partly allowed.
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