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2019 (1) TMI 738 - AT - Income TaxBogus purchases - Revenue received information from Sales-tax Department, Government of Maharashtra, that certain dealers were only providing accommodation bills without actually supplying materials Held that:- Since the assessee has failed to reconcile the purchases with the sales, we are of the view that the profit element embedded in such purchases is justified. The learned AR submitted that the VAT applicable on the product is around 5%. In these kind of purchases, the assessee could have made savings on account of VAT and also would have got materials at discounted rate. Considering these position of the issue, we are of the view that the estimate of profit at 25% is on the higher side. Hence on the conspectus of the matter, we are of the view that this issue may be put to rest, if the addition is sustained to 12.50% of the value of bogus purchases. Accordingly, we modify the order passed by the learned CIT(A) and direct the A.O. to sustain the addition to the extent of 12.50% of the value of bogus purchases. - Appeal filed by the assessee is partly allowed.
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