Case Law Details
ITO Vs Rajesh Amulakhrai Sanghvi (ITAT Mumbai)
In a recent decision, the Income Tax Appellate Tribunal (ITAT) Mumbai addressed an appeal filed by the Revenue against an order passed by NFAC, Delhi. The case, ITO Vs Rajesh Amulakhrai Sanghvi, involved the assessment for the Assessment Year 2009-10.
The dispute arose from the Revenue’s challenge against the decision of the ld. CIT(A) to restrict the disallowance to 12.5% of the purchases instead of the entire amount. The assessee had declared a total income of Rs.4,72,510/- and shown purchases amounting to Rs.15,77,629/- from two parties.
The ld. AO added the entire purchase amount under section 69C, citing discrepancies in the notices served and business operations of the involved parties. However, the ld. CIT (A) restricted the addition, estimating a GP rate of 12.5% on the bogus purchases.
Upon review, the ITAT Mumbai found the AO’s action unjustified, considering that the purchases were recorded in the books of accounts with corresponding material transactions. While acknowledging the possibility of purchases from hawala dealers, the tribunal deemed the 12.5% GP rate reasonable, following the precedent set by the Bombay High Court in similar cases.
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