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2022 (3) TMI 475 - AT - Income TaxBogus purchases - addition of 100% of purchases shown from Pravin Kumar Jain Companies/entities - HELD THAT:- We find the assessee has filed bill of purchases and bank statement in order to substantiate the genuineness of purchases. The evidence furnished by assessee bills of purchases and bank statement showing the transaction through banking channel. AO has disregarded such documentary evidence furnished by assessee. The sales of the assessee is not disputed by assessing officer. AO not rejected the books of account. No other observation on books of assessee was made. It is settled law that no sale is possible in absence of purchase. We find that before, ld. CIT(A) the assessee filed in very detailed and exhaustive submissions. The profit element in such disputed purchase is to be disallowed to avoid the possibility of revenue leakage. We find that Assessing Officer identified the disputed purchase to the extent of sale of ₹ 12.05 Crores and disallowance of 100% of such purchases. In our view, 100% of disallowance of such purchases without disputing the sales is not justified. Similarly, disallowance restricted by ld. CIT(A) to the extent of 5% is also not justified when the assessee has shown GP of less than of less than 1% (.88%). Considering over all facts and circumstances of the case, we are of the view that disallowance of 6% of the disputed purchases of ₹ 3.46 Crore, would meet possibility of revenue leakage. Hence, the Assessing officer is directed to disallow/restrict the addition of bogus purchases to the extent of 6% of such purchases. In the result, the appeal of the Revenue is partly allowed.
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