PCIT Vs Ramelex Private Ltd (Bombay High Court)
Bombay HC Upholds 15% Profit Addition on Bogus Purchases – No Question of Law – Dismisses Revenue’s Appeal- Reliance on Sales Tax Data Alone Insufficient – Revenue’s Appeal Dismissed in Hawala Purchase Case
Bombay High Court dismissed the Revenue’s appeal, upholding the ITAT’s order restricting addition on bogus purchases to 15% of alleged Hawala purchases, relying on the Gujarat High Court ruling in CIT v. Simit P. Sheth (356 ITR 451)
Assessee, engaged in power transmission projects, was alleged to have made bogus purchases of ₹2.05 crore based on information from DG (Investigation), Pune regarding Sales Tax Hawala dealers. AO added the entire sum as bogus purchases u/s 147. The Assessee, however, produced purchase bills, ledger accounts, bank proofs & VAT auditor’s certificate, explaining that one entry from M/s Entech Enterprises was a typing error — actual purchase being ₹11.63 lakh instead of ₹1.16 crore.
CIT(A) accepted the explanation, holding that the goods were actually consumed & only billing was irregular; applying GP rate of 15% on the adjusted figure, the addition was reduced to ₹15.12 lakh. ITAT affirmed this finding, noting that the AO had not disproved the purchases nor allowed cross-examination of alleged hawala parties.
