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2013 (10) TMI 1028 - HC - Income Tax
Estimated the possible profit out of purchases made through non-genuine parties - Addition on account of bogus purchases Entire purchase amount to be added or the profit element embedded in such purchase be added Held that - Commissioner adopted the ratio of 30 percent of such total sales. The Tribunal, however, scaled down to 12.5 percent We may notice that in the immediately preceding year to the assessment year under consideration the assessee had declared the gross profit at 3.56 percent of the total turnover. If the yardstick of 30 percent., as adopted by the Commissioner (Appeals), is accepted the gross profit rate will be much higher. In essence, the Tribunal only estimated the possible profit out of purchases made through non-genuine parties. No question of law in such estimation would arise. The estimation of rate of profit return must necessarily vary with the nature of business and no uniform yardstick can be adopted - Disallowance to the extent of 12.5 percent is allowed Decided against the Revenue.