Case Law Details
ITO Vs Balajay Infrastructure Pvt. Ltd. (ITAT Ahmedabad)
ITAT Ahmedabad held that in case of bogus purchases, if the sale is not in doubt, then only the profit element embedded in such purchases should be subject to tax in the hands the assessee. Accordingly, CIT(A) restricting disallowance to 25% of the addition justified.
Facts- AO had received the information from the Investigation Wing that it had conducted a search in the case of M/s. Tricon Construction on 5.12.2012. M/s. Tricon Construction had obtained bogus bills for material and labour. The Investigation Wing had identified bogus billers and these bogus billers had admitted under oath that they had not rendered any actual service or supply of goods against the payment received. The bogus billers had also admitted that they had withdrawn the cash and returned the same to the payers after deducting their commission.
The appellant is one of the potential beneficiaries. Based on the information received from the Investigation Wing, AO in order to find out the genuineness and whereabouts of these bogus billers had issued summons u/s. 131 of the Act. However, the bogus billers and appellant did not attend.
However, on failure of the appellant as well as the four persons as bogus billers to attend as well as non-verification of their address, AO concluded that the appellant was not able to discharge its onus and genuineness of purchase of goods from the bogus billers was done with a view to regularise the purchase made from the unregistered dealers in the open market.
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