PCIT Vs N. N. Trading Corporation (Bombay High Court)
In PCIT vs N.N. Trading Corporation, the Bombay High Court dismissed the Revenue’s appeal concerning the estimation of gross profit (GP) on alleged bogus purchases. The Assessing Officer (AO) had estimated the GP at 12%, which was subsequently reduced to 5.75% by the Commissioner (Appeals). The Income Tax Appellate Tribunal (ITAT) upheld this revised estimation. The Court observed that since the AO had not disallowed the full amount of purchases and the dispute was limited to the rate of profit estimation, no substantial question of law arose. Referring to similar earlier decisions where comparable appeals were dismissed and remained unchallenged, the Court reiterated that estimation of profit is a factual determination and not a question of law. Accordingly, the High Court dismissed the appeal without costs, affirming the ITAT’s order and maintaining that minor variations in GP estimation do not constitute a substantial legal issue.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned counsel for the parties.
2. In this case, Assessing Officer has estimated the gross profit (GP) at 12 % on the bogus purchases. This was not challenged by the revenue in any proceedings. The Commissioner (Appeals), reduced this estimation to 5.75%. On an appeal by the revenue on the question of GP estimation, the Income Tax Appellate Tribunal (ITAT) has now confirmed the appeal order.
