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| The Tax Publishers2020 TaxPub(DT) 4340 (Mum-Trib) INCOME TAX ACT, 1961
Section 69C
Where AO had not disputed corresponding sales, impugned purchases could not be treated as bogus in entirely as there could be no sales without purchases, accordingly, addition was restricted to 12.5% profit element embedded in impugned purchases.
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Income from undisclosed sources - Addition under section 69C - Bogus purchases - No dispute as regards corresponding sales
Assessee engaged in exporting of different commodities such as spices, pickles and general merchandise was found to have made cash purchases. AO treated entire purchases claimed by assessee as bogus and made addition under section 69C, however, without disputing corresponding sales. CIT(A) reduced the disallowance @ 12.5%. Revenue challenged this. Held: There could be no sales without purchases, accordingly entire purchases could not be held as bogus and, therefore, addition was restricted to 12.5% profit element embedded in impugned purchases.
Followed:CIT v. Smith (P) Sheth (2013) 356 ITR 451 (Guj) : 2013 TaxPub(DT) 2115 (Guj-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Rule 34(5)(c)
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