PCIT 1 Vs Jigisha Satishkumar Mehta (Gujarat High Court)
Revenue Appeal Dismissed as AO Failed to Independently Verify Alleged Bogus Purchases; Entire Bogus Purchase Addition Rejected Because AO Relied Only on Sales Tax Information; Gujarat High Court Distinguishes N.K. Industries, Upholds Estimated Bogus Purchase Addition; No Substantial Question of Law in 5% Bogus Purchase Addition; 5% Addition Sustained as Documentary Evidence Supported Purchases Despite Bogus Billing Allegation; Gujarat High Court Refuses Full Addition Where Bogus Purchases Were Not Independently Established; Concurrent Findings on Bogus Purchase Estimation Upheld Due to Insufficient Evidence.
The Gujarat High Court dismissed the Revenue’s appeal under Section 260A of the Income-tax Act, 1961, arising from the order of the Income Tax Appellate Tribunal relating to Assessment Year 2010-11. The Revenue challenged the Tribunal’s decision restricting the addition on account of alleged bogus purchases to 5% of such purchases, contending that the Tribunal had overlooked the High Court’s decision in N.K. Industries Ltd., where the entire bogus purchases had been added. The High Court examined whether any substantial question of law arose from the Tribunal’s order.
The assessee, an individual carrying on business as a dealer in chemicals through a proprietary concern, filed the return of income declaring a total income of ₹10,80,530. The assessment was reopened under Section 147 based on information received from the Maharashtra Sales Tax Authority, alleging that the assessee had made bogus purchases amounting to ₹15,38,784 from a hawala dealer, Nina Enterprise. The Assessing Officer issued notices under Sections 148 and 142(1). As the assessee neither attended the assessment proceedings nor filed submissions despite opportunities, the Assessing Officer completed the assessment under Section 144 read with Section 147 and made an addition of ₹15,38,784 under Section 68, relying solely on the information received from the Maharashtra Sales Tax Authority.
