PCIT-1 Vs Keshri Exports (Gujarat High Court)
The Gujarat High Court dismissed the Revenue’s tax appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (ITAT), Surat, relating to Assessment Year 2013-14. The case concerned additions made on account of alleged bogus purchases obtained from entities linked to the Bhanwarlal Jain Group, which was stated to be engaged in providing accommodation entries and non-genuine purchase bills.
The assessee, engaged in the business of import, processing, export, and trading of diamonds, had filed its return declaring total income of Rs.2.53 crore. Based on information received from the Investigation Wing, Mumbai, the Assessing Officer found that the assessee had allegedly obtained bogus purchase bills amounting to Rs.8.64 crore from the Bhanwarlal Jain Group. The assessment was reopened under Sections 143(3) read with 147, and the entire amount of Rs.8.64 crore was added to the assessee’s income as bogus purchases.
The Commissioner of Income Tax (Appeals) partly allowed the assessee’s appeal and restricted the addition to 5% of the disputed purchases. On further appeal by the Revenue, the ITAT partly allowed the Revenue’s appeal and enhanced the disallowance to 6% of the unexplained purchases instead of sustaining the entire addition.
