Niraj Pravinchandra Doshi Vs ITO (ITAT Mumbai)
Bogus Purchases: ITAT Mumbai Restricts Addition to 5% Where Sales Are Undisputed
The Mumbai ITAT (SMC Bench) partly allowed the appeal of the assessee for AY 2009-10 concerning estimated additions on account of alleged bogus purchases. The Assessing Officer had treated purchases from six parties as non-genuine based on information from the Investigation Wing/Sales Tax Department and made an addition at 12.5% of such purchases, amounting to ₹39.17 lakh. The CIT(A) upheld the addition in a brief order.
Before the Tribunal, the assessee did not press grounds relating to reopening, lack of cross-examination, and violation of natural justice, and confined the challenge only to the quantum of addition. The Tribunal noted that sales were not disputed, books of account were not rejected, payments were made through banking channels, confirmations from some parties were filed, and there was no finding of circular movement of funds. Mere non-service of notices under section 133(6) was held to be insufficient to treat the entire purchases as bogus.
Relying on a co-ordinate bench decision in ITO v. Khimchand Okchand Bhansali, the Tribunal held that estimation at 12.5% was excessive and restricted the disallowance to 5% of the impugned purchases. Accordingly, the addition was reduced to ₹15.67 lakh (approx.), and the appeal was partly allowed
FULL TEXT OF THE ORDER OF ITAT MUMBAI
