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2017 (11) TMI 1197 - ITAT MUMBAIAddition of bogus purchases - profit element embedded in these purchase transactions - Held that:- We are of the considered opinion that there could be no sale without purchases. The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. On the other hand, the assessee could not produce confirmations from the alleged bogus suppliers and further notices sent u/s 133(6) were returned back undelivered in both the cases. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against bogus purchases. We estimate the same @5% since the goods in question were subjected to VAT rate of 1%. Accordingly, we sustain the addition to the extent of 5% of bogus purchases of ₹ 47,45,081/- which comes to ₹ 2,37,254/-. - Decided partly in favour of revenue
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