On bogus purchases reasonable GP rate would be applied and added to assessee’s income, and not entire bogus purchases

New Consolidated Construction Company Ltd. Vs DCIT (ITAT Mumbai) The assessee conceded that to buy peace of mind he was ready to accept the percentage as consistently applied by the Tribunal in other cases. When a query was put to the revenue he also fairly agreed for a reasonable percentage. ITAT held that Profit rate of 12.5% of bogus purchases was to be applied as had been applied by Gujarat High Court in Smith P. Seth’s case. AO was directed to compute the income of all these assessment years accordingly and not the entire bogus purchases were to be added. FULL TEXT OF THE ITAT ORD...