Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (5) TMI AT This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2021 (5) TMI 762 - AT - Income Tax


Issues Involved:
1. Justification of profit element restriction on alleged bogus purchases.
2. Confirmation of disallowance on estimated basis for conveyance, telephone, and traveling expenses.

Issue 1:
The first issue pertains to the justification of restricting the profit element embedded in alleged bogus purchases at 3% as opposed to 9% determined by the Assessing Officer (AO). The Appellate Tribunal considered the case of a company engaged in diamond trading, which had made purchases from entities suspected to be hawala dealers. The AO estimated the profit element at 9% based on the value of purchases, leading to an addition under section 69C of the Income Tax Act. However, the Tribunal noted that the assessee provided evidence indicating responses to the AO's notices and discrepancies in the statements recorded during search proceedings. Relying on legal precedents and considering the gross profit ratio of the assessee in earlier years, the Tribunal reduced the profit element to 1% on the value of the alleged bogus purchases, deeming it sufficient for justice.

Issue 2:
The second issue involves the confirmation of a disallowance on an estimated basis at 10% for conveyance, telephone, and traveling expenses. The AO and the Commissioner of Income Tax (Appeals) (CIT(A)) raised concerns regarding the verifiability and personal nature of these expenses, leading to the estimated disallowance. The Tribunal noted that the assessee failed to provide concrete evidence to refute the personal element in the expenses. Despite no arguments from the assessee's representative, the Tribunal upheld the disallowance, dismissing the ground raised by the assessee on this matter. Additionally, a general ground raised by the assessee was deemed not to require specific adjudication.

In conclusion, the Appellate Tribunal partially allowed the appeal, addressing the issues related to the profit element on alleged bogus purchases and the disallowance on an estimated basis for certain expenses. The Tribunal's decision was based on a thorough analysis of the facts, legal precedents, and the evidence presented during the proceedings.

 

 

 

 

Quick Updates:Latest Updates