ITAT has restricted the addition of income on account of bogus purchases, at the same gross profit rate as that of the other genuine purchases.

Last updated: 22 January 2021

Save Share

Quick Summary

The Income Tax Appellate Tribunal (ITAT) has ruled on an appeal concerning additions made for bogus purchases. The Assessing Officer had initially added the full amount of Rs. 3,12,24,345/- for purchases from allegedly bogus dealers. However, the Commissioner of Income Tax (Appeals) reduced this addition to 5%, noting that the assessee's sales were not in doubt. The Revenue appealed this decision, but the ITAT upheld the reduced addition.

Court :
ITAT Mumbai

Brief :
This is an appeal by the Revenue wherein the Revenue is aggrieved that thelearned Commissioner of Income Tax (Appeals)-45, Mumbai (‘ld.CIT(A) for short)dated 21.01.2019 has reduced the addition for bogus purchase of Rs.3,12,24,345/- done @ 100% by the Assessing Officer (A.O. for short) by sustaining only 5% for the assessment year (A.Y.) 2011-12.

Citation :
ITA No. 3094/Mum/2019

IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, MUMBAI
BEFORE SHRI SHAMIM YAHYA, AM AND SHRI VIKAS AWASTHY, JM

ITA No. 3094/Mum/2019
(Assessment Year: 2011-12)

ITO-33(2)(2)
848, 8th Floor, Kautilya Bhavan, BKC,
Bandra (E), Mumbai-400 051
PAN/GIR No. AJAPB 1472 C
(Appellant)

Vs.

Shri Ketan Gokuldas Badiani
D-303, 3rd Floor,
Bhoomi Enclave CHS,
Mahavir Nagar, Dahanukarwadi,
Kandivali (W), Mumbai-400 067
(Respondent)

Appellant by : Shri Gurbinder Singh
Respondent by : None

Date of Hearing : 16.12.2020
Date of Pronouncement : 01.01.2021

O R D E R

Per Shamim Yahya, A. M.:

This is an appeal by the Revenue wherein the Revenue is aggrieved that thelearned Commissioner of Income Tax (Appeals)-45, Mumbai (‘ld.CIT(A) for short)dated 21.01.2019 has reduced the addition for bogus purchase of Rs.3,12,24,345/- done @ 100% by the Assessing Officer (A.O. for short) by sustaining only 5% for the assessment year (A.Y.) 2011-12.

2. The assessee in this case is engaged into the business of trading in personal articles like belts, wallets and buckles, etc.

3. The assessment was reopened upon information from the Sales Tax Department that the assessee has made Rs.3,12,24,345/- purchases from bogus dealers. The A.O. made 100% addition of the bogus purchase.

4. Upon assessees appeal, the ld.CIT(A) noted that the sales has not been doubted.Accordingly, placing reliance upon several case laws and upon the facts of the case, he sustained 5% disallowance out of the bogus purchases.

5. Against the above order, the Revenue is in appeal before the ITAT.

To know more in details find the attachment file

FAQ :

The Assessing Officer made a 100% addition of Rs. 3,12,24,345/- to the assessee's income on account of alleged bogus purchases.

The Commissioner of Income Tax (Appeals) reduced the addition to 5% because the assessee's sales were not questioned, and based on case laws and the facts presented.

The assessee is engaged in the business of trading in personal articles such as belts, wallets, and buckles.

The assessment was reopened based on information received from the Sales Tax Department regarding purchases from bogus dealers.

The ITAT upheld the decision of the Commissioner of Income Tax (Appeals) to sustain only 5% of the bogus purchases as an addition to the income.