ITAT directed AO to recalculate income by making 15% disallowance
ITAT directed AO to recalculate income by making 15% disallowance
Assessee, proprietor of M/s Heeralal Chaganlal Tank, filed its return of income at Rs 19,55,434. AO held that assessee’s stock register was not verifiable. AO noticed that assessee had made purchases, which were held to be non-genuine purchases. AO disallowed 25% of unverifiable purchases and made addition. CIT(A) confirmed addition of Rs 1 lakh. ITAT directed AO to recalculate income by disallowing 15% of unverifiable purchases.
1. Assessee, proprietor of M/s Heeralal Chaganlal Tank was in the business of precious and semi precious stone.
2. It filed its return of income declaring total income of Rs. 19,55,434.
3. The case was scrutinized u/s 143(3).
4. Assessee had disclosed gross profit (GP) rate of 16.33% in comparison to GP rate of 22.40% of the immediately preceding year.
5. AO held that assessee’s stock register was not verifiable, and it had also not maintained the quantitative, qualitative, rate-wise details.
6. AO u/s 145(3) rejected the books of accounts.
7. AO noticed that assessee had made purchases amounting to Rs. 48,38,558 from various parties, which were non genuine purchases.
8. AO disallowed 25% of unverifiable purchases and made addition.
9. CIT(A) upheld rejection of books of account, and confirmed addition of Rs 1 lakh and deleted rest of addition.
On appeal, the ITAT held as under:
10. Similar line of cases, this Bench has decided in the case of Shri Anuj Kumar Varshney vs.
ITO and other cases, where on unverifiable/bogus purchases 15% net income has been decided.
11. Accordingly, we also apply 15% on unverifiable purchases in this case also as net income.
12. The AO is directed to recalculate the income as per above direction.
Case Reference - Asstt. Commissioner of Income Tax vs Shri Dharmendra Kumar Tank.
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR,
ITA No. 245/JP/2014
(Assessment Years : 2006-07)
