Income Tax Act, 1961

--Business expenditure--Purchases not supported by sufficient evidence Profit element added to income on estimate basisAssessing officer during reassessment proceedings found that purchases were not supported by sufficient evidence and on verifying from the suppliers, it was found that such parties had never supplied goods to assessee, thus he made addition of the entire purchases. Commissioner (Appeals) found that though the purchases were not made from the parties from whom assessee claimed, but there was complete quantitative tally of materials purchased and sold, therefore, he added only profit element at 30 per cent and not for the entire amount of purchases. On further appeal, Tribunal gave relief to assessee and made addition at 12.5 per cent of purchases towards its profit. Held: Tribunal was justified as purchases were made but not from disclosed sources and, therefore, no question of law arose in respect of estimation of profit element.

Income Tax Act, 1961 Section 37

In the Gujarat High Court