DCIT Vs Amar Ghanasingh (ITAT Mumbai)
Entire Purchase Can’t Be Disallowed When Sales Are Accepted—Only 3% Profit Element to Be Taxed on Bogus Purchases—ITAT Mumbai Follows Consistency Rule
The Revenue filed appeal against the order of NFAC (CIT(A)) dated 13.06.2025 for AY 2013-14 where relief had been granted to M/s Amar Ghanasingh, a jewellery manufacturer & trader.
During scrutiny, AO alleged that the Assessee had made purchases of ₹ 9.40 crore from five entities linked with the Bhanwarlal Jain Group—identified as accommodation entry providers. Holding these to be non-genuine, AO invoked section 145(3), rejected books & estimated 8% additional gross profit on such purchases, making an addition of ₹ 75.24 lakh.
Before CIT(A), the Assessee furnished detailed evidences—purchase & sales registers, quantitative reconciliation, bank statements, confirmations, ITRs & VAT details of suppliers. CIT(A) observed that AO had accepted the sales & closing stock & only questioned purchases. Relying on the consistent view of the Tribunal in identical Bhanwarlal Jain Group cases (notably Trustar Diamonds v. ACIT, ITA Nos. 748 & 1278/Mum/2023 dt. 23.10.2023), where addition was restricted to 3%, CIT(A) held that only the profit element embedded in such purchases could be added. Accordingly, addition was confined to 3% of the impugned purchases.
