Entire amount cannot be added to income when assessee is not able to prove the genuineness of the party

Last updated: 26 December 2022

Save Share

Quick Summary

The Income Tax Appellate Tribunal (ITAT) in Ahmedabad ruled that if a business cannot prove the identity of a supplier, the entire purchase amount should not automatically be added to their income. Instead, only a portion, specifically 10% of the purchase value, should be added back, particularly considering the profit already declared on the final product. The tribunal also noted that the assessee's fixed deposit balances were correctly stated.

Court :
ITAT Ahmedabad

Brief :
The ITAT, Ahmedabad in the case of M/s. Accra Pac (India) Pvt. Ltd. v. D.C.I.T [ITA No. 514/Ahd/2018 dated November 07, 2022], partially allowed the appeal of the assessee against the order passed by the Revenue Department confirming the addition of unexplained deposit as bogus purchases on the ground that the assessee was not able to prove the genuineness of the party. Held that, only 10% of the purchase would be added to the Appellant’s income in case where the Appellant was unable to prove the supplier’s identity. Further remanded back the matter for verification.

Citation :
ITA No. 514/Ahd/2018 dated November 07, 2022

Daily Limit Reached