ACIT Vs Kamlesh Deoraj Jain (ITAT Rajkot)
Circular Trading Not Equivalent to Fictitious Transactions-ITAT Rajkot Upholds Deletion of 12.5% Addition on Alleged Bogus Purchases;
The Rajkot Bench of the ITAT dismissed the Revenue’s appeal and upheld the order of the CIT(A) deleting an addition of ₹2.94 crore made by applying a flat rate of 12.5% on alleged bogus purchases for AY 2017-18. The Assessing Officer had rejected the books under section 145(3) and treated purchases from M/s Ankur Chemfood Ltd. as bogus, alleging circular trading without actual movement of goods, and relied on precedents such as Simit P. Sheth.
The Tribunal noted that in the assessee’s own case for AY 2018-19, on identical facts, the ITAT had already held that although the transactions were circular in nature, they were not fictitious or bogus, as they were duly documented, routed through banking channels, supported by confirmations, and reflected in quantitative records. The AO’s own finding of “circular trading” negated the application of principles governing bogus purchase cases where only profit element is estimated.
Emphasising judicial discipline, the Tribunal held that in the absence of any fresh material or contrary evidence, the CIT(A) was justified in following the binding precedent in the assessee’s own case. Additions cannot be sustained merely on suspicion or general investigation inputs. Accordingly, the Revenue’s appeal was dismissed and the deletion of the 12.5% addition was affirmed
FULL TEXT OF THE ORDER OF ITAT RAJKOT
