SCK Infratech Pvt. Ltd Vs DCIT (ITAT Delhi)
Bogus Purchases in Construction Cases: ITAT Restricts Addition to 6% on Estimated Basis
The Delhi Bench of the ITAT partly allowed the appeal of SCK Infratech Pvt. Ltd. (AY 2020-21) by substantially reducing the addition made on account of alleged bogus purchases of ₹13.78 crore from the Sanjay Jain & Mehta Group. While the Assessing Officer and CIT(A) had treated the entire purchases as unexplained under section 69C, the Tribunal noted that the assessee was engaged in the civil construction business, where sourcing from unregistered or accommodation parties cannot be ruled out, and importantly, corresponding sales were never doubted.
Taking note of divergent judicial precedents on bogus purchases and the peculiar facts of the case, the ITAT held that complete disallowance was unjustified. In the interest of justice, it restricted the addition to a lumpsum disallowance of 6% of the alleged bogus purchases, treating it as an estimate of possible profit element embedded in such transactions. The Tribunal clarified that this estimation shall not be treated as a precedent.
Accordingly, the appeal was partly allowed, with the assessee’s books rejected only to the limited extent of the estimated disallowance.
FULL TEXT OF THE ORDER OF ITAT DELHI
