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2020 (8) TMI 658 - AT - Income TaxBogus purchases - addition made by AO off non-genuine and bogus purchases by applying profit rate at the rate of 12.5% - HELD THAT:- Neither the AO nor CIT(A) has doubted the sales made by assessee out of these bogus purchase. Assessee has produced all the necessary documents in support of purchased transactions such as purchase invoices, purchase register, sales register, stock register, bank statement evidencing payment made by account payee cheque etc. But it is a fact that the assessee could not produce the transportation evidences or expenditure incurred on account of transportation in regard to these purchases. Hence, a reasonable profit can be estimated because the estimation of profit is on higher side -Both the authorities lower had admitted assessee have made sales which is not denied out of these purchases. It means that the assessee might have purchases from grey market and also saved VAT. Hence, a reasonable profit on these bogus bills can be estimated. Hence, estimate the profit on these bogus bills at the rate of 5% and direct the AO to recompute the income accordingly. Appeals of assessee are partly allowed.
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