Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (7) TMI 451 - AT - Income TaxDisallowance u/s. 37(1) - Estimation of income on bogus purchases - suspicious purchases of wrist watches which were stated to be given to buyers as sales promotion - as per CIT-A it is reasonable to make an estimated addition of 12.5% against these purchases - HELD THAT - We concur with the adjudication of Ld. CIT(A) that receipt and utilization of wrist watches could not be ignored. The assessee might have made savings by purchasing the goods from the open market. Therefore, it was quite reasonable to make estimated additions of 12.5% against the purchases so made by the assessee. Finding no infirmity in the impugned order, we dismiss the appeal.
Issues:
Appeal against order of Ld. CIT(A) granting partial relief on disallowance u/s. 37(1) for A.Y. 2011-12. Analysis: 1. The appeal by Revenue contested the order of Ld. CIT(A) granting partial relief to the assessee on account of disallowance made by Ld. AO u/s. 37(1) for ?7.60 Lacs for the assessment year 2011-12. 2. During the hearing, no one appeared for the assessee, but the material on record was deemed sufficient for the disposal of the appeal. The Ld. DR pleaded for the restoration of the assessment as framed by Ld. AO u/s. 143(3) r.w.s. 147 on 19/09/2016. 3. The assessment revealed suspicious purchases of ?7.60 Lacs from M/s. Shulabh Trading Company, where wrist watches were claimed as sales promotion expenses under section 37(1). The assessee provided ledger extracts, bills, bank statements, and confirmation details, but the supplier could not be traced, leading to the disallowance of the expenditure. 4. Ld. CIT(A) noted that the documentary evidence provided by the assessee was not disproved, and the actual purchases were likely made from the open market while bills were obtained from the supplier. Consequently, an estimated addition of 12.5% against these purchases was deemed reasonable. The revenue, aggrieved by this decision, filed a further appeal. 5. The ITAT concurred with Ld. CIT(A)'s decision that the receipt and utilization of wrist watches could not be disregarded. Considering that the assessee may have saved money by purchasing goods from the open market, an estimated addition of 12.5% against the purchases was justified. Finding no fault in the impugned order, the appeal was dismissed. 6. The appeal was ultimately dismissed, with the order pronounced on 5th July 2021.
|