Profit rate on bogus purchases reduced as assessee also paid VAT on purchases. ITAT directed AO to recompute income after applying profit rate of 8%
ABCAUS Case Law Citation:
ABCAUS 2946 (2019) (05) ITAT
The assessee had appealed against the orders of Commissioner of Income Tax (Appeals) against upholding the reassessment framed by the Assessing Officer (AO) under section 147 of Income Tax Act, 1961 (the Act).
On merits, the assessee challenged the order of CIT(A) confirming the addition made by AO applying the profit rate at 12.5% of the bogus purchase.
The assessee was engaged in the business of trading. The AO received information from DGIT (Investigation), who in turn had received information from Sales Tax Department that the assessee had made purchases from hawala parties, as listed in hawala dealers by the State Sales Tax Department who were providing bogus bills of purchase.
During the course of assessment proceedings and during appellate proceedings, the assessee submitted documentary evidences such as payment received against such sales, receipt of material purchases, account payee cheque.
However, according to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition of unproved purchase to the returned income of the assessee.
Aggrieved, assessee preferred the appeal before CIT(A), who confirmed the addition made by the Assessing Officer (AO).
The Tribunal observed that that the CIT(A) had confirmed the profit rate at the rate of 12.5%, which was on higher side going by the nature of business of the assessee.
The Tribunal expressed agreement with the contentions raised by the assessee before CIT(A) and opined that a profit rate of 12.5% was on higher side as assessee had also paid the VAT element on these bogus purchases.
The Tribunal was of the view that in view of the , a further deduction in estimation of profit to the extent of 4.5% could be allowed. Hence, the Tribunal directed the AO to recompute the income after applying profit rate at the rate of 8%.
Addition u/s 68 for jewellery purportedly received on death of grandparent under Will upheld. In a recent judgment, ITAT upheld…
Supreme Court lays down tests to determine whether a debt is a financial debt or an operational debt under IBC…
Merely because directors of two companies were common not mean that deposits received was bogus and companies were shell companies…
Application though named as rectification but if tax imposed is not legitimate then it also touches upon the merit –…
Cost of acquisition as on 01.04.1981 taken as per valuer report by reverse indexing of current FMV to be further…
ITAT directed AO to serve notice of hearing both through electronic and physical mode upon the assessee In a recent…