2019 (7) TMI 980 - AT - Income Tax

Disallowance of bogus purchases - allegation that purchases are from group of concerns operating at Mumbai providing Tax paid bills and collecting payment through cheque and banking channels after payment of commission of its services charges and there is no actual delivery of goods - HELD THAT:- We find that the books of accounts regularly maintained by the assessee including quantitative details have not been rejected by the A.O u/s 145 except the alleged purchases. No other major discrepancy have been noticed in the books. Books of accounts are duly audited.

Sales made by the assessee are not in dispute. The assessee is into the business since many years and is consistently showing the gross profit and net profit. Alleged supplier of goods are duly registered under Value Added Tax Act. Payment made through banking channel. Quantity maintained in the alleged bills are part of quantitative records maintained by the assessee. There is no drastic change in the gross profit and net profit rate. Since the sales have not been doubted there ought to be corresponding purchases.

However some of the ingredients for testing the genuineness of purchases are missing but for this reason itself total purchase cannot be disallowed else abnormal and distorted profits will appear in the profit and loss account.

We find that similar issue has came up before the Co-ordinate Bench in the case of V.R. Enterprises V/s ITO [2019 (6) TMI 1080 - ITAT MUMBAI] and PCIT V/s Mohommad Haji Adam & Co [2019 (2) TMI 1632 - BOMBAY HIGH COURT] also estimated the addition for alleged various purchases @12.5% being the profit element.

No inconsistency in the well reasoned finding of CIT(A) confirming the disallowance of purchases at 12.5% of the alleged bogus purchases. No interference is therefore called for in the finding of CIT(A). Sole ground raised by the revenue stands dismissed. In the result appeal of the Revenue stands dismissed.