I would like to know if there is any case law where it has been held that suppression of purchases amounts to supression of sales and therefore profit. I am a Revenue Officer and would like to bring a case where there has been systematic suppression of purchases. Please help.
Phoolchand UJOODHA
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Use logic
Presenting this as an understatement of profits is easy.
Firstly you cut off the bolt holes by ensuring that the "defendant" confirms that nobody purchases goods on his account with his suppliers and then that all purchases are paid out of business bank accounts or business cash. Then when you establish that goods were purchased that were not recorded by the taxpayer in the business books you have him/her by the shorties as clearly he must have understated his sales to cover the off record purchases. So once you have established the sales are understated the sky is the limit - unless of course you come up against a seasoned tax investigation specialist who knows as much or more than yourself.
Hope that this helps