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| The Tax Publishers2021 TaxPub(DT) 0757 (Mum-Trib) INCOME TAX ACT, 1961
Section 69
Since assessee was not able to prove the source of purchase and also keeping in view the gross profit declared by the assessee, disallowance @ 4% of the non-genuine purchases would be fair and reasonable, instead of 12.5% of the alleged non-genuine purchases for both assessment years 2010-11 and 2011-12 made by AO.
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Income from undisclosed sources - Addition under section 69 - Non-genuine purchases -
AO on the ground of failure of assessee to submit documentary evidences to prove the genuineness of purchases held the purchases made by assessee as non-genuine. However, instead of disallowing the entire purchases, he restricted the disallowance to 12.5% of the alleged non-genuine purchases for both assessment years 2010-11 and 2011-12. Held: Assessee had submitted that the assessee has declared gross profit rate of 6.79% in assessment year 2010-11 and 9.68% in assessment year 2011-12. It is also a fact that as per industry norms the profit rate on the goods traded is normally between 2% to 4%. Considering the fact that the assessee was not able to prove the source of purchase and also keeping in view the gross profit declared by the assessee, disallowance @ 4% of the non-genuine purchases would be fair and reasonable.
REFERRED :
FAVOUR : Partly in favour of assessee.
A.Y. : 2010-11 & 2011-12
IN THE ITAT, MUMBAI BENCH
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