DCIT Vs Somnath Vaijnath Sakre (ITAT Pune)
The AO treated the entire purchases as bogus based on information from investigation wing/suspicious dealers and made full addition. The CIT(A) partly upheld the addition.
The ITAT observed that although the suppliers were doubtful, the sales were accepted and corresponding purchases could not be entirely disallowed. In such cases, only the profit element embedded in such purchases can be brought to tax.
Following settled judicial precedents, the Tribunal held that estimation of profit is appropriate instead of 100% disallowance, and accordingly restricted the addition to a reasonable percentage of the alleged bogus purchases.
The appeal was thus partly allowed, granting substantial relief to the assessee
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the Revenue is directed against the order dated 24.07.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2013-14.
2. This is the second round of litigation before the Tribunal. Facts of the case, in brief, are that the assessee is an individual and engaged in the business of manufacturing of plastic water tank / plastic milk cane under the name and style of M/s. Shree Maruti Udyog. He filed his return of income on 31.10.2013 declaring total income of Rs.5,55,53,700/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). Subsequently the case was selected for scrutiny under CASS and accordingly statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee in response to which the assessee filed the requisite details. The Assessing Officer completed the assessment u/s 143(3) of the Act on 01.03.2016 assessing the total income of the assessee at Rs.5,55,85,528/-.
