| Question And Answer | |
|---|---|
| Subject: | Bogus purchases and sale |
| Category: | Income-Tax |
| Querist: | Manoj |
| Answered by: | Advocate Neelam Jadhav |
| Tags: | Bogus purchases and sale |
| Date: | December 15, 2022 |
Assessee firm M/S. ABCÂ is partnership firm engaged in the business of trading of goods. During the search with another co, it is found that purchases effected by the co from partnership firm are not supported by Movement of goods, and the E way bill and toll receipt, and therefore AO considered the same as bogus purchases. On this ground the AO has made addition U/Sec.68 by considering the sales as bogus. Is action of AO is justified in Law.
Sales cannot be made addition under section 68 of the Act . When the purchases are reflected in the regular books of account and stock register is maintained . Refer PCIT v. Sandeep P. Shah (2021) 124 taxmann.com 206 (Guj) (HC), SLP of revenue is dismissed, PCIT v. Sandeep P. Shah (2021) 277 Taxman 395 (SC) In Manju Sharma v. ITO (2021) 85 ITR 388 (Delhi) (Trib) held that entire amount payable to six sundry creditors is held to be not justified only GP estimate of 16% on unsubstantiated purchases from six creditors was up held. One has study the facts and apply the law .