On appeal the Tribunal held that the purchases existed in the books of account of the assessee and the onus was on the assessee to prove that the purchases were genuine. Under these circumstances, the possibility of the assessee buying the material actually from the grey market at lower rates and obtaining corresponding bills from the parties to reconcile the quantitative records and books of account could not be ruled out. Hence the profits estimated by the CIT(A) at 12.5% was reasonable (ITA No.1441 & 3133/Mum/2016 dt. 01-02-2018) (AY. 2007-08)
ITO v. Prankit Exports (2018) 62 ITR 243 (Mum.)(Trib.)
S. 69C : Unexplained expenditure –Bogus purcahses -Estimation of profits embedded in purchases at 12.5% is reasonable when the assessee failed to prove the purchases to be genuine and also failed to produce the selling parties during the course of the assessment proceedings. [ S.133(6),145 ]