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2020 (4) TMI 581 - AT - Income TaxEstimation of income - bogus purchases - HELD THAT:- AO has not disallowed the sales, but disputed only the purchases. Therefore, we cannot disallow 100% of the purchases and we have seen that various courts held that when the AO accepts the turnover without any dispute and in those situation, only the benefit enjoyed by the assessee are being considered for disallowance instead of 100% of purchases and considering the benefit enjoyed by the assessee for these type of transactions, the rate of disallowance were varying from 12.5% to 3%. We notice that during this current AY, the turnover of the assessee has grown to 20.68 crores against 8.05 crores, even though there is sharp increase in the turnover, the assessee declared only 3.07% as the GP. Since Ld. CIT(A) has adopted previous year gross profit as the base for this AY also. But the results achieved by the assessee for the period is not reasonable and cannot be relied on. Therefore, following the standard basis of the decision of the Coordinate Benches, we are inclined to direct the AO to disallow 12.5% of the purchases value which are under dispute. - Decided partly in favour of revenue.
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