ITO Vs Ruptex Mineral Water Pvt. Ltd. (ITAT Delhi)
Bogus Sales Allegation Cut to Nominal Margin: ITAT Restricts Addition to 5% of Turnover in Accommodation Entry Case
AO made addition of ₹1.27 crore u/s 69A alleging accommodation entry sales based on survey statements of third parties, without rejecting books u/s 145(3) or disputing corresponding purchases. CIT(A) held that 100% addition of alleged bogus sales was unjustified where purchases were accepted & restricted addition to profit element by applying GP rate of 13.45%, sustaining addition of ₹17.15 lakh.
Tribunal noted that both alleged sales & corresponding purchases were accommodation entries & that Assessee had already disclosed higher GP of about 17.08% on such transactions compared to normal GP of 13.31%. Holding that taxing entire sales or even full GP would be excessive, ITAT further restricted addition to 5% of gross alleged sales as a measure of deterrence. Revenue’s appeal was dismissed & Assessee’s cross-objection partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The Revenue has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”, for short] dated 10.03.2025 for the Assessment Year 2018-19 and the assessee has filed cross objections against the aforesaid impugned order dated 10.03.2025.
