2020 (9) TMI 607 - ITAT HYDERABAD - Income Tax

Head Note / Extract:
Bogus purchases - AO estimated 10% of the bogus purchase - CIT (A) enhanced the addition by treating the entire bogus purchases as the income of the assessee - HELD THAT:- Onus is on the assessee to establish the genuineness of the suppliers. Though the payment made by the assessee towards the purchases are through banking channels, it is also revealed that the suppliers were issuing bogus bills and vouchers to various parties. In this situation, producing the bills and vouchers and evidencing the payment made through cheque alone will not establish that the transactions are genuine. AO was right in relying on the decision of the Hon’ble Apex Court in the case of M/s. Kachwala Gems [2006 (12) TMI 83 - SUPREME COURT] estimating the additional income of 10% on the bogus purchases made from the grey market which works out to ₹ 9,30,487/-. Order of the Ld. CIT (A) to enhance the addition by treating the entire bogus purchases as the income of the assessee is not appropriate because it is evident that the assessee had made purchases apparently from his accounted money as the payments have made through banking channels. Further it is also a fact that the Gold/Jewellery purchased are either sold by the assessee or remains with the assessee as his closing stock, since there are no other contrary findings by the Revenue. Set aside the order of the Ld. CIT (A) and confirm the order of the Ld. AO. - Appeal of the assessee is partly allowed.