ITAT Cuts Estimated 20% Profit Rate to 12.5% in Bogus Purchase Case Calling It Excessive, remanded for Recomputation

The Income Tax Appellate Tribunal reduced the estimated profit addition on alleged bogus purchases from 25% to 5%, calling the higher rate unjustified. While upholding the principle of estimation for unverified purchases, the tribunal emphasized that additions must be reasonable and supported by facts. The case was remanded for fresh computation, directing the assessing officer to consider the taxpayer's specific circumstances rather than applying a blanket rate.