INCOME TAX ACT, 1961

Section 69C

Income from undisclosed sources - Addition under section 69C - Alleged bogus purchases - Sales being not disputed

AO noticed that assessee-company made certain purchases from Hawala dealers. Accordingly, the AO issued notice under section 133(6) to the concerned suppliers, for which, no reply was received. Further, the AO also asked the assessee to produce the concerned parties, which was not done by the assessee. Therefore, the said purchases were treated as bogus and the same were added under section 69C. Further, CIT(A) restricted such addition to 25% of the alleged bogus purchases. Held: It was found that the AO had not disputed the sales made out of corresponding purchases. Further, in assessee's own case for earlier assessment year on identical issue, the Tribunal directed the AO to adopt profit rate on alleged bogus purchases @12.5% and thereafter reduce the gross profit already declared by the assessee to quantify the disallowance on account of alleged bogus purchases. In view of the same, the AO was directed to adopt profit percentage @12.5% minus gross profit already declared by the assessee with regard to the alleged bogus purchases.

REFERRED :

FAVOUR : Partly in favour of assessee

A.Y. : 2009-10

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