Addition in bogus purchase transaction reduced on pro-rata basis

Ravi Kedia Vs ITO (ITAT Raipur)

Accordingly, on the basis of my aforesaid observations the matter is restored to the file of the A.O.

ITAT Raipur held that addition in case of bogus purchase transaction restricted to the extent of the difference between the gross profit of genuine purchases transactions and gross profit of bogus purchases transactions.

Facts- On the basis of information that had surfaced in the course of survey action u/s. 133A of the Act conducted at the business premises of five rice millers a/w. two brokers on 15.03.2016, it was gathered by the A.O that the assessee as a beneficiary had procured bogus purchase bills of a value of Rs.30,12,000/- during the year under consideration from two parties.

Assessee submitted that he had already surrendered 10% of the purchases under the IDS, 2016. It was observed by the A.O that the disclosure made by the assessee under IDS, 2016 on account of bogus purchases in itself established that he had not made genuine purchases from the aforementioned parties. Apart from that, it was observed by the A.O that the disclosure of Rs.2,73,200/- that was made by the assessee worked out at 9% (approx.) of the total amount of bogus billing of Rs.30.12 lac. A.O after deliberating at length on the modus-oparandi that was adopted by the rice millers/brokers for procuring bogus purchase bills etc., concluded that the assessee had not made any genuine purchases from the parties in question.

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