|The Tax Publishers2021 TaxPub(DT) 0555 (Mum-Trib)
INCOME TAX ACT, 1961
Disallowing 12.5% of purchases as benefit garnered in unverifiable purchases, where sales are not disapproved, is a sound benchmark that was rightly adopted in assessee's case too.
Income from undisclosed sources - Addition under section 69C - Unverified purchases - No dispute as regards corresponding sales
AO received information from Sales Tax Department, Government of Maharashtra as to assessee being beneficiary of receiving bogus purchase bills from certain parties. Accordingly, AO treated purchases as bogus and made addition under section 69C of entire purchases. CIT(A) restricted addition to 12.5% of purchases. Assessee challenged this. Held: Although purchases made by assessee could not be summarily rejected but at the same time it was difficult to accept that purchases shown on the invoices/bills were as per the prevailing market price of those materials or actually been made from such parties and might have been purchased in the grey market. Assessee had not placed any evidence on record that that the goods were purchased from the above parties at arm's length price. Disallowing 12.5% of purchases as benefit garnered in such unverifiable purchases where sales are not disapproved, is a sound benchmark that was rightly adopted in assessee's case too.
Followed:CIT v. Simit P. Sheth [(2013) 355 ITR 290 (Guj.) : 2013 TaxPub(DT) 2115 (Guj-HC).
FAVOUR : Against the assessee.
A.Y. : 2009-10 & 2010-11
IN THE ITAT, MUMBAI BENCH
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