INCOME TAX ACT, 1961

Section 69C

Income from undisclosed sources - Addition under section 69C - Bogus purchases - No dispute as regards corresponding sales

Assessee was engaged in garden development and maintenance business. AO based on information emanated from Sales-tax Department, treated purchases claimed by assessee as bogus and made addition under section 69C, however, without disputing corresponding sales. Held: Impugned purchases had formed part of duly accounted corresponding sales of assessee for the year under consideration and had been accepted by AO, therefore, addition in the hands of the assessee was liable to be restricted only to the extent assessee had inflated purchases made from unverified parties. In sum and substance, addition was liable to be restricted only to the extent assessee would have benefited by purchasing goods at a discounted value from unverified parties. Accordingly, AO was directed to adopt a gross profit rate of 12% for the purpose of estimating profit as regards unverified purchases made by assessee.

Supported by:Kishore Agarwal (assessee's brother) ITA No. 870 & 871/Mum/2015, dated 25-1-2017 for assessment year 2010-11 and assessment year 2011-12 : 2017 TaxPub(DT) 0375 (Mum-Trib); Order passed by the Tribunal in the case of Technotrade Impex India Pvt. Ltd. (sister concern of the assessee) in ITA No. 3835/Mum/2016, dated 24-1-2018 for assessment year 2011-12; and Order passed by the Tribunal in the case of viz. Technotrade Impex India Pvt. Ltd. (sister concern of the assessee) in ITA No. 5382 & 5383/Mum/2016, dated 17-4-2018 for assessment year 2009-10 and assessment year 2012-13 : 2018 TaxPub(DT) 2059 (Mum-Trib).

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2009-10

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