ITAT Directs GP-Based Addition as Jewellery Purchases Formed Part of Sales & Closing Stock

Vineet Agarwal Vs ACIT (ITAT Delhi)

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) partly allowed the appeal filed by the assessee for Assessment Year 2017-18 against the order of the Commissioner of Income Tax (Appeals), Lucknow, which had sustained an addition of Rs.1,92,47,792 on account of alleged bogus purchases of jewellery.

The assessee, an individual engaged in the trading business of bullion and jewellery, earned business income along with income from house property and interest income. The accounts of the assessee were audited, and during the assessment proceedings, all books of account, including quantitative details, were produced before the Assessing Officer. The books of account and quantitative records submitted by the assessee were accepted by the Assessing Officer, and no rejection of books was made by invoking Section 145(3) of the Income Tax Act. The quantitative details relating to purchases were also accepted by the VAT authorities.

The assessee had filed the return of income declaring total income of Rs.16,88,080. However, the Assessing Officer completed the assessment under Section 143(3) by determining the total income at Rs.2,09,35,870 after making an addition of Rs.1,92,47,792 by treating the jewellery purchases as bogus. The Commissioner (Appeals) upheld the action of the Assessing Officer, leading to the present appeal before the Tribunal.