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2017 (11) TMI 310 - AT - Income TaxBogus purchases - AO has estimated net profit of 25% on total alleged bogus purchases - Held that:- It is fair and reasonable to estimate 12.5% net profit on alleged bogus purchases. The CIT(A), after considering relevant facts has rightly directed the AO to estimate the net profit of 12.5% on the alleged bogus purchases. We do not find any error or infirmity in the order of CIT|(A). Payment of additional VAT on alleged bogus purchases - whether credits need to be given for VAT payment out of net profit estimated on total alleged bogus purchases - Held that:- The issue needs to be examined by the AO in the light of the claim of assessee that it has paid additional VAT on purchases from those six parties. Hence we set aside the issue to the file of the AO for the limited purpose of verification whether the assessee has paid additional VAT on purchases from those six parties on denial of input tax credit by Sales-tax department. If the claim of the assessee is found to be correct, then the AO is directed to allow credit for payment of VAT on purchases from those six parties out of net profit determined on the alleged bogus purchases.
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