ITO Vs Pravinchandra B Dedhia (ITAT Mumbai)
Bogus Purchase Disallowance – Issue of 12.5% vs 100% Addition Remanded to CIT(A) for Fresh Fact Verification – ITAT Mumbai
The Revenue challenged the order of the CIT(A) restricting disallowance on alleged bogus purchases to 12.5% instead of sustaining the full addition of ₹48.32 lakh made by the AO u/s 69C. The assessment had been completed u/s 144 r.w.s. 147 based on Investigation Wing information that the assessee obtained accommodation purchase bills from hawala dealers, and due to non-compliance and lack of response to notices, the AO treated the entire purchases as unexplained expenditure.
The CIT(A), while accepting that the purchases were not fully proved genuine, restricted the addition to 12.5% relying on judicial precedents. However, the Revenue contended that the CIT(A)’s findings were inconsistent since he himself observed lack of credible evidence and non-compliance with notices u/s 133(6). The Tribunal noted absence of clear factual findings regarding stock, sales correlation, and nature of purchases, making it difficult to determine whether only profit element or entire purchases should be disallowed.
Considering incomplete factual examination, ITAT set aside the issue and remanded the matter to the CIT(A) for fresh adjudication after bringing relevant facts on record and granting opportunity to the assessee. Accordingly, the Revenue’s appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This is an appeal filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 14-03-2025, pertaining to Assessment Year (AY) 2010-11.
