PCIT Vs Bhagat Marketing Pvt. Ltd. (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 Income Tax Appellate Tribunal’s order dated 14.10.2024 for Assessment Year 2016-17. The Revenue challenged the Tribunal’s decision setting aside the Principal Commissioner of Income Tax’s (PCIT) revisional order passed under Section 263, contending that the Assessing Officer (AO) had erred in making an addition of only 12.5% of the alleged bogus purchases instead of adding the entire amount under Section 69C and taxing it in accordance with Section 115BBE.
The assessee, a private limited company engaged in trading stainless steel, had filed its return declaring a loss. Pursuant to reassessment under Sections 147 read with 144B, the AO passed an assessment order on 27.03.2022 determining assessed income by making an addition of ₹1,13,12,210, representing 12.5% of alleged non-genuine purchases amounting to ₹9,04,97,678 from M/s. Varia Aluminium Pvt. Ltd. During assessment proceedings, the assessee maintained that the goods were never accepted because they were defective and did not meet quality standards. The AO did not accept this explanation and treated the purchases as bogus but restricted the addition to 12.5% of the alleged purchases.
