9911796707
TMI Blog2018 (11) TMI 1840X X X X Extracts X X X X X X X X Extracts X X X X ..... is a fact on record that the assessee has failed to prove the purchases from the declared sources, which in other words demonstrates that the assessee has purchased the goods/diamonds from unknown sources/grey market, thereby, avoiding payments of VAT and other taxes, as may be applicable to such transactions. Thus, to that extent the assessee has suppressed his actual profits. The gross profit rate declared by the assessee under normal circumstances cannot be applied to unproved purchases. After considering the overall facts and circumstances of the case, we are of the considered opinion that learned CIT(A) is more than reasonable in estimating the profit on the bogus purchases @3%. Therefore, we are not inclined to interfere with the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the addition u/s. 69C of the Act to 3% of the alleged bogus purchases. 5. Briefly, facts are the assessee - a company is engaged in the business of trading in diamond. For the impugned assessment year, the assessee filed its return of income on 23.09.2010 declaring total income of ₹ 6,23,440/-.Though, initially the return of income filed by the assessee was processed u/s. 143(1) of the Act, subsequently, the Assessing Officer re-opened the assessment u/s. 147 of the Act on the basis of information received from DGIT (Inv) revealing that the assessee has availed accommodation entries from certain parties. In the course of assessment proceedings when the Assessing Officer called upon the assessee to prove the purchases made of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in the context of facts and material on record, though, agreed with the Assessing Officer that the assessee has failed to prove the genuineness of the purchases made, however, he reduced the addition to 3% of the alleged bogus purchases. 6. The learned AR contesting the addition sustained by the learned CIT(A) submitted that the gross profit shown by the assessee in the preceding years is much less than 3% estimated by the learned CIT(A). Thus, he submitted, the estimation of profit on account of bogus purchases should be restricted to the average gross profit rate declared by the assessee in the subsequent assessment years. 7. We have considered rival submissions and perused the material on record. From the orders of the department ..... X X X X Extracts X X X X X X X X Extracts X X X X
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