PCIT Vs Jotindra Steels And Tubes Ltd. (Delhi High Court)
The Delhi High Court dismissed the Revenue’s appeal under Section 260A of the Income Tax Act, 1961, arising from the ITAT order dated 06 October 2022 for assessment year 2014-15. The assessee was engaged in manufacturing and trading of steel, tubes and pipes, along with erection and fabrication work. In the assessment framed under Section 153A read with Section 143(3), the Assessing Officer made various additions, including Rs. 14,09,31,491/- on account of alleged bogus purchases, holding that certain purchases were fictitious or bogus.
Read ITAT Judgment in this case: ITAT Delhi Restricts Bogus Purchase Addition to Profit Element Only
The assessee challenged the assessment before the CIT(A), which allowed the appeal by order dated 30 November 2016. The CIT(A) examined the purchases and recorded that the purchases were made through banking channels, proper VAT records were maintained, and Input Tax Credit had been claimed. The appellate authority also found that purchases from the four parties were supported by pre-authenticated purchase invoices or Form-XXI, properly dated and signed by the concerned Commercial Tax Department authority, and that the purchases were duly accounted for in the regular books of account.
The CIT(A) further observed, as an alternative suggestion, that even if the purchases were established to be bogus, only the gross profit relatable to the quantity purchased and sold could be considered as income rather than the entire purchase value. The ITAT treated this observation as a finding and added the percentage of profit to the assessee’s income. The Revenue approached the High Court seeking to revive the Assessing Officer’s treatment of the entire purchases, taking advantage of the tax imposed on the profit element.
