DCIT Vs Metarolls Ispat Pvt. Ltd (ITAT Pune)
ITAT Pune held that addition towards bogus purchases adopting profit rate of 5% is justifiable since suppliers neither responded to notices issued u/s. 133(6) nor appeared before AO in response to summons issued u/s. 131.
Facts- The assessee is a company engaged in business of manufacturing of steel products such as MS Billets & TMT Bars. During course of search, AO observed that assessee is involved in purchasing from entities which were engaged in providing accommodation entries. Accordingly, AO issued notice u/s. 133(6) to three alleged suppliers. However, due to non-compliance, AO made addition of Rs.11,70,03,386/-. CIT(A) deleted the said addition. Being aggrieved, revenue has preferred the present appeal.
Revenue has also contested deletion of addition of Rs. 14 Lakhs made by AO on account of unexplained money.
Conclusion- Held that the assessee in the instant case has filed various details such as lorry bills, invoices, e-way bills, etc. the fact remains that such parties neither responded to notices issued u/s 133(6) nor appeared before the Assessing Officer in response to the Summons issued u/s 131 of the Act. At the same time, it is also an admitted fact that the sales of the assessee have not been disputed and the books of account have also not been rejected. Considering the totality of the facts of the case and considering the fact that the Assessing Officer in assessee‟s own case for the four preceding assessment years has adopted the profit rate of 5% on account of bogus / untested purchases, therefore, we are of the considered opinion that adoption of the same profit rate of 5% on account of untested / bogus purchases of Rs.13,80,63,994/- will meet the ends of justice. We, therefore, set aside the order of the Ld. CIT(A) and direct the Assessing Officer to adopt the profit rate of 5% on the total purchases of Rs.13,80,63,994/- and restrict the addition to Rs.69,03,200/-. The order of the Ld. CIT(A) is accordingly modified.
