https://www.taxtmi.com/caselaws?id=311430 The ITAT Mumbai held that where an assessee made purchases from suspicious dealers who later admitted to not supplying goods, the entire purchase amount should not be treated as bogus income. The tribunal found merit in the CIT(A)'s approach of taxing only the profit element embedded in such purchases, noting the assessee likely purchased goods from alternative sources at inflated prices to claim excess deductions. However, the tribunal disagreed with applying the net profit rate, instead directing addition of 12.50% of the bogus purchase value, considering VAT savings and discounts obtained. The tribunal noted declining gross profit rates supported revenue's case of purchase price inflation. Revenue's appeals were partly allowed with the addition sustained at 12.50% across all assessment years. en-us Fri, 22 Sep 2017 00:00:00 +0530 Tue, 26 Dec 2023 06:11:44 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=311430 The ITAT Mumbai held that where an assessee made purchases from suspicious dealers who later admitted to not supplying goods, the entire purchase amount should not be treated as bogus income. The tribunal found merit in the CIT(A)'s approach of taxing only the profit element embedded in such purchases, noting the assessee likely purchased goods from alternative sources at inflated prices to claim excess deductions. However, the tribunal disagreed with applying the net profit rate, instead directing addition of 12.50% of the bogus purchase value, considering VAT savings and discounts obtained. The tribunal noted declining gross profit rates supported revenue's case of purchase price inflation. Revenue's appeals were partly allowed with the addition sustained at 12.50% across all assessment years. Case-Laws Income Tax Fri, 22 Sep 2017 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=311430