PCIT Vs Prathana Gems (Gujarat High Court)
In , the Gujarat High Court dismissed the Revenue’s tax appeal filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal (ITAT), Surat, for Assessment Year 2014-15. The dispute related to additions made on account of alleged bogus purchases from entities linked to the Bhanwarlal Jain Group, which was alleged to be engaged in providing accommodation entries and non-genuine purchase bills.
Read SC Judgment in this case: SC Declines Interference as No Substantial Question of Law Arose on 6% Bogus Purchase Addition
The assessee had filed its return declaring nil income. Based on information received from the Investigation Wing, Mumbai, the Assessing Officer found that the assessee had obtained non-genuine purchase bills amounting to Rs.1.31 crore from concerns connected with the Bhanwarlal Jain Group. Accordingly, an assessment under Section 143(3) was completed by making 100% addition of the alleged bogus purchases.
The assessee’s appeal before the CIT(A) was dismissed, and the addition of the entire purchase amount was confirmed. Subsequently, the assessee approached the Tribunal. The Tribunal partly allowed the appeal and restricted the disallowance to 6% of the disputed purchases instead of sustaining the entire addition. The Tribunal relied upon its earlier decision in Pankaj J. Chaudhary v. ITO.
