Entire Bogus Purchases Can’t Be Added if Sales Are Undisputed: Bombay HC

PCIT Vs Mohommad Haji Adam & Co. (Bombay High Court) Mumbai: In a significant ruling, the Bombay High Court in the case of PCIT Vs Mohommad Haji Adam & Co. held that where sales are not in dispute, the entire amount of bogus purchases cannot be added back to a trader’s income. The court affirmed that in such cases, the addition should be limited to the estimated profit margin embedded in such transactions. The case involved a fabric trader whose purchases from three specific entities were identified as bogus by the income tax department following survey operations on the supplier...