Case Law Details
Parnami Pump & Projects Pvt. Ltd. Vs DCIT (ITAT Delhi)
Bogus Purchases Cannot Be Wholly Disallowed Without Disallowing Sales Only Gross Profit (GP) Rate Should Be Added as Undisclosed Income
We find that the Assessing Officer had issued summons u/s.131 to the proprietor of the said entity from whom assessee has made purchases, but that remained uncomplied with nor assessee could produce the party. However, on the other hand, the sources of purchase have gone from the books of the assessee and there is a corresponding sale. In such a situation at the most even if assessee has made bogus purchases through cheque from the sources disclosed in the books of account and thereafter has taken accommodation entry and has received the cash back, then the same goods must have purchased from the grey market in cash, Since sales and purchase quantity wise details in the trading account has not been disturbed then at the most it could be a case of suppression of gross profit. Under these circumstances, we hold that addition on account of enhancement GP on the said purchase would be reasonable. Hence, we direct the Assessing Officer to apply 8% GP on the alleged bogus purchases. Accordingly, the appeal of the assessee is partly allowed.
FULL TEXT OF THE ITAT JUDGEMENT
The aforesaid appeal has been filed by the Assessee against the impugned order dated 02.01.2018, passed by ld. CIT(A)-VII, New Delhi for the quantum of assessment passed u/s.143(3)/147 for the Assessment Year 2009-10. In various grounds of appeal, the assessee has challenged the validity of reopening u/s.147 and addition of Rs.8 lacs on account of alleged bogus bill in the name of M/s. Vee Gee Industrial Enterprises.
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