Case Law Details
B Narayan Associates Vs CIT (ITAT Mumbai)
ITAT Mumbai held that addition in case of bogus purchases should be limited to the extent of G.P. rate on purchases. Accordingly, matter remanded with direction to reduce addition only to the extent of profit margin involved in such purchases.
Facts-
The assessee is a partnership firm carrying on the business as civil contractors at Thane. AO noticed that there was a survey carried out in the case of the assessee on 10.03.2021 and statements u/s. 131 of the Income Tax Act, 1961 were recorded from Shri Narayan Das Bhatia, partner and Ms. Isha Majalkar, Accountant of the assessee. Based on the statements, AO held that the amount as stated by the Accountant as profits to be suppressed is coming out of the purchases made from the above parties which are bogus in nature and accordingly made an addition of the entire purchases as income in the hands of the assessee. AO also added 1% of the alleged bogus purchases towards commission which the entry provider usually charge.
CIT(A) upheld the addition. Being aggrieved, the present appeal is filed.
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