Ellora Ispat Vs ITO (ITAT Pune)
ITAT Pune: Bogus Purchase Addition Restricted to 6% Where Sales Accepted and Payments Made by Cheque
The Pune Bench of the ITAT partly allowed the assessee’s appeal and dismissed the Revenue’s appeal in a case involving alleged bogus purchases from M/s. Rashmi Enterprises for AY 2009-10. The Assessing Officer had added the entire purchase amount of ₹31.45 lakh as bogus, which was later reduced by the CIT(A) to 12.5% of the purchases.
On further appeal, the Tribunal noted that the assessee had produced purchase bills, lorry receipts, corresponding sales details, and proof of payments made through account-payee cheques in subsequent years. Importantly, the assessee’s sales were not disputed, books of account were not rejected under section 145(3), and the gross profit rate was consistent with earlier years.
Considering the absence of quantitative stock records but also the acceptance of sales and genuineness of payments, the Tribunal held that only the profit element embedded in the disputed purchases could be taxed. It therefore restricted the addition to 6% of the alleged bogus purchases (₹1.89 lakh) and deleted the balance, clarifying that this estimation was case-specific and not a binding precedent
FULL TEXT OF THE ORDER OF ITAT PUNE
