Case Law Details
Omkar Metal & Alloys Corporation Vs ITO (ITAT Mumbai)
Addition in case of bogus purchase to be made only to the extent of lower GP declared as compared to GP in normal purchases
Conclusion: Addition in case of bogus purchases was required to be made only to the extent of lower GP declared by assessee on bogus purchases as compared to G.P. on normal purchases. Thus, no addition was warranted in case of assessee as GROSS PROFIT declared by assessee in respect of alleged bogus purchases was more than the GROSS PROFIT declared in the normal purchases.
Held: Assessee was engaged in the business of trading in ferrous and non-ferrous metals. AO got an information from the Sales Tax Department regarding assessee taken purchase bills which was alleged to be bogus. Accordingly, AO reopened the assessment and after making inquiry added 12.5% of the alleged bogus purchases in the assessee’s income in all the years under consideration. It was held that in case of bogus purchases where sales were accepted, quantitative details of purchases, sales and stock was filed with copy of delivery challans, the addition was required to be made only to the extent of lower GP declared by assessee on bogus purchases as compared to G.P. on normal purchases. As per the GP statement chart placed on record it was found that the GROSS PROFIT declared by assessee in respect of alleged bogus purchases was more than the GROSS PROFIT declared in the normal purchases. Thus, no addition was warranted.
FULL TEXT OF THE ITAT JUDGEMENT
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