Case Law Details
ACIT Vs Shri Pankaj Sancheti (ITAT Indore)
The issue under consideration is whether the CIT(A) is correct in restricting the addition u/s 69C for bogus purchases to 12.5% against the total purchase disallowance made by AO?
ITAT states that on examining the facts of the instant appeal, the books of accounts regularly maintained by the assessee including quantitative details have not been rejected by the Ld. A.O u/s 143 of the Act except the alleged purchases. No other major discrepancy have been noticed in the books. Books of accounts are duly audited. Sales made by the assessee are not in dispute. The assessee is into the business since many years and is consistently showing the gross profit and net profit. Alleged supplier of goods are duly registered under Value Added Tax Act. Payment made through banking channel. Quantity maintained in the alleged bills are part of quantitative records maintained by the assessee. There is no drastic change in the gross profit and net profit rate. Since the sales have not been doubted there ought to be corresponding purchases. However some of the ingredients for testing the genuineness of purchases are missing but for this reason itself total purchase cannot be disallowed else abnormal and distorted profits will appear in the profit and loss account. Hence, ITAT is of the opinion that the disallowance of entire disputed purchases cannot be made and only the income on the disputed purchase could be sustained.
ITAT therefore in the given facts and circumstances of the case find no inconsistency in the well reasoned finding of CIT(A) confirming the disallowance of purchases at 12.5% of the alleged bogus purchases. In the result appeal of the Revenue stands dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
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