Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2020 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 662 - HC - Income TaxBogus purchases - none of the supplier parties are in existence and the assessee has just taken accommodation entries without getting actual supplies from the said parties - Tribunal restricting the disallowance to 5% of the gross purchases - HELD THAT:- We do not find any error or infirmity in the view taken by the Tribunal. The lower appellate authorities had enhanced the quantum of purchases much beyond that of the Assessing Officer i.e., from ₹ 24,18,06,385.00 to ₹ 65,65,30,470.00 but having found that the purchases corresponded to sales which were reflected in the returns of the assessee in sales tax proceedings and in addition, were also recorded in the books of accounts with payments made through account payee cheques, the purchases were accepted by the two appellate authorities and following judicial dictum decided to add the profit percentage on such purchases to the income of the assessee. While the CIT (A) had assessed profit at 2% which was added to the income of the assessee, Tribunal made further addition of 3% profit, thereby protecting the interest of the Revenue. In Bholanath Polyfab Limited [2013 (10) TMI 933 - GUJARAT HIGH COURT] was also confronted with a similar issue. In that case Tribunal was of the opinion that the purchases might have been made from bogus parties but the purchases themselves were not bogus. Considering the fact situation, Tribunal was of the opinion that not the entire amount of purchases but the profit margin embedded in such amount would be subjected to tax. Gujarat High Court upheld the finding of the Tribunal. It was held that whether the purchases were bogus or whether the parties from whom such purchases were allegedly made were bogus was essentially a question of fact. When the Tribunal had concluded that the assessee did make the purchase, as a natural corollary not the entire amount covered by such purchase but the profit element embedded therein would be subject to tax. No substantial question of law
|