Case Law Details
Babulal Hajarimalji Jain Vs ITO (ITAT Mumbai)
Undisputedly the entire addition in this case has been made by the AO as well as Ld. CIT(A) on the basis of guess work and estimation on the basis of some alleged information received from Sales Tax Department of Maharashtra and from DGIT (Inv.), Mumbai that “the assessee has taken bogus purchase bills without having taken any delivery of the goods, without applying their mind. It is also not in dispute that the AO has also not examined the books of accounts of the assessee nor has reached a definite conclusion that the bills for purchasing the goods relied upon by the assessee are bogus but simply made the addition on the basis of information received from DGIT (Inv.) and from Sales Tax Department of Maharashtra. It is also not in dispute that in the earlier years the Ld. CIT(A)/Revenue has itself estimated the profit element on such bogus purchases @ 6.5% of the alleged bogus purchases.
In the backdrop of the aforesaid undisputed facts the A.R. for the assessee contended that during the earlier years the Revenue has itself determined the profit element in bogus purchases @ 6.5% and brought on record order passed by the Ld. CIT(A) in assessee’s own case for A.Y. 2009-10.
Hon’ble High Court of Bombay in case of Pr. CIT vs. JK Surface Coatings Pvt. Ltd. in ITA No.1850 of 2017 order dated 28 October, 2021 upheld the view taken by the Tribunal that in such circumstances gross profit should be in the range of 5% to 12.5% as reasonable estimation of profit element embedded in the bogus purchases.
ITAT held that in the light of the gross profit earned by the assessee in the earlier years on the basis of which profit element was fixed at 6.5% of the alleged bogus purchases, AO to charge the assessee at the gross profit rate @ 6.5% on bogus purchases of Rs.3,70,79,423/-.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
