PCIT-2 Vs Refrigerated Distributors Pvt Ltd (Bombay High Court)
Bombay High Court has dismissed an appeal filed by the Principal Commissioner of Income Tax (PCIT-2) concerning the assessment of Refrigerated Distributors Pvt Ltd for the assessment year 2009-10. The Revenue’s appeal, which raised questions regarding the disallowance of alleged bogus purchases and the application of a profit rate, was dismissed by the High Court on the grounds that no substantial question of law arose from the facts of the case as litigated in the lower forums.
The dispute originated during the assessment of Refrigerated Distributors Pvt Ltd. The Assessing Officer had identified certain purchases as bogus but did not disallow the entire amount. Instead, the Assessing Officer estimated 25% of these alleged bogus purchases as gross profit and added this amount to the company’s income.
Refrigerated Distributors Pvt Ltd challenged this addition before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A), after reviewing the case, upheld the Assessing Officer’s decision to estimate the gross profit at 25% of the bogus purchases.
Subsequently, Refrigerated Distributors Pvt Ltd appealed the CIT(A)’s order before the Income Tax Appellate Tribunal (ITAT). The Tribunal, in its order dated January 13, 2017, provided partial relief to the company by reducing the estimated gross profit rate from 25% to 10% of the alleged bogus purchases.
