Case Law Details
DCIT Vs Parth Developers (ITAT Ahmedabad)
ITAT Ahmedabad held that addition in case of bogus purchases are restricted only to the extent of profit element involved on such purchases. Accordingly, CIT(A) correctly restricted addition to the extent of 10%.
Facts- AO held that the claim of expenditure of Rs.4,17,13,702/- on account of creditors as bogus expenditure and added the same as the assessee’s total income and demanded tax thereon.
Aggrieved against the Assessment Order, the assessee filed an appeal before CIT(A). CIT(A) restricted the disallowance by estimating at 10% on account of alleged bogus purchase and directed to confirm the addition of Rs. 41,71,370/- and to delete balance addition of Rs. 3,75,42,332/- on account of bogus purchase and thereby partly allowed the assessee appeal. Being aggrieved, revenue has preferred the present appeal.
Conclusion- The Hon’ble Gujarat High Court in the case of CIT-II vs Gujarat Ambuja Exports Ltd [2014] 43 taxmann.com 244 (Guj), wherein, the addition of 5% of the bogus purchase confirmed by the Tribunal was upheld.
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