PCIT Vs Sunilkumar Parasmal Jain (Gujarat High Court)
The Gujarat High Court adjudicated a tax appeal filed under Section 260A of the Income Tax Act, 1961, challenging an order of the Income Tax Appellate Tribunal (ITAT), Surat dated 06.05.2024 for Assessment Year 2010–11. The appeal raised multiple questions of law concerning the correctness of the Tribunal’s decision to uphold the restriction of addition on alleged bogus purchases to 6% instead of 100%.
The case originated from information received from the Investigation Wing, Mumbai, indicating that a group engaged in providing accommodation entries had issued non-genuine purchase bills. Based on this information, it was alleged that the assessee had obtained bogus purchase bills amounting to ₹10,73,43,555. The assessment was reopened, and an order under Sections 143(3) read with 147 was passed on 22.11.2016, wherein the Assessing Officer (AO) added the entire amount of ₹10,73,43,555 to the income, treating it as bogus purchases.
The assessee challenged the assessment before the Commissioner of Income Tax (Appeals), who partly allowed the appeal by restricting the addition from 100% of the alleged bogus purchases to 6% of such purchases. The Revenue then appealed before the ITAT, which upheld the order of the CIT(A) and dismissed the Revenue’s appeal. The Tribunal relied on its earlier decision in a similar case and concluded that only a percentage of the purchases representing the income component should be taxed.
