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2017 (5) TMI 1822 - AT - Income TaxEstimation of income - bogus purchases - CIT(A) in restricting the addition to 12.5% of such purchases - HELD THAT:- Undisputedly, the assessee is executing civil contract work awarded mostly by MCGM. The CIT(A) has noted that without purchasing materials/goods it would not have been possible on the part of the assessee to execute the contract work with the MCGM. The assessee is executing work of a government authority. Therefore, there cannot be any manner of doubt with regard to the nature of work or the quantum of work carried out by the assessee. It is evident from record that the AO is not disputing the turnover of contract work executed by the assessee. Therefore, unless the assessee procured the materials/goods, though may not be from the declared sources but from some other sources, it would not have been possible on the part of the assessee to execute work awarded by MCGM. That being the case, the entire purchases made by the assessee cannot be added back as income but only profit element embedded therein can be treated as income of the assessee. No infirmity in the order of the CIT(A) in estimating profit at 12.5%. - Decided against revenue.
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