Case Law Details
ITO Vs Mayur R. Kamdar (ITAT Mumbai)
The proceedings stemmed from the Income Tax Officer’s (ITO) claim that the appellant, engaged in the building material trading business, benefited from bogus purchase bills. These bills, received from ten parties, were flagged by the Sales Tax Department and DGIT. The appellant couldn’t produce any party to confirm the transactions, which raised suspicions about his claims. However, despite this, the fact that the appellant possessed primary purchase documents, the payments made through banking channels, and the reconciliation of sale and purchase transactions were taken into consideration by the ITAT.
The reassessment by the AO using a higher Gross Profit Rate led to an addition to the appellant’s income, which was later partially reversed by the CIT(A), reducing the disallowance to a percentage of the alleged bogus purchases.
The ITAT upheld CIT(A)’s decision, finding it fair and reasonable. It observed that while there were doubts about the purchases due to the inability to confirm transactions, the appellant couldn’t have achieved sales turnover without purchasing materials.
The case of ITO vs Mayur R. Kamdar is a comprehensive example of the intricacies involved in tax assessment and reassessment processes. It elucidates the effects of allegations of bogus purchases and their implications on tax liabilities. This landmark ruling by the ITAT Mumbai highlights the necessity of corroborative evidence in such cases and demonstrates the gravity of maintaining transparent transaction records.
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