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2023 (1) TMI 362 - AT - Income TaxUnaccounted purchases - unaccounted income of the assessee - During the course of survey, unaccounted purchases & unaccounted sales were noticed - HELD THAT:- It is only net result of unaccounted purchases & unaccounted sales, needs to be taxed. Since, the Department had already taxed profit earned out of unaccounted transactions, the question of making further additions towards unaccounted purchases does not arise. In this case, the facts remain that the assessee has offered additional income for two assessment years towards unaccounted sales, whereas the total unaccounted purchases for the impugned assessment year - Therefore, it is difficult to accept the arguments of the assessee that income earned out of unaccounted sales is plugged back into the business and which is source for unaccounted purchases, because, unaccounted purchases noticed by the Department is more than the amount of additional income offered by the assessee. Therefore, assessee could not able to explain source for unaccounted purchases over and above what was disclosed during the course of survey. Hence, to cover up the deficit in source for unaccounted purchases, we direct the AO to estimate 25% of gross profit on unaccounted purchases and delete the balance additions made towards unaccounted purchases. Appeal filed by the assessee is partly allowed.
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