ITAT Mumbai Reduces 100% Bogus Purchase Addition to Nominal GP Difference

Arham Star Vs ITO (ITAT Mumbai) The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, in the case of Arham Star Vs ITO, partially allowed the assessee’s appeal, holding that the disallowance for alleged bogus purchases cannot be 100% of the purchase value when the corresponding sales are accepted and supported by documentary evidence. The Tribunal restricted the addition to the difference in Gross Profit (GP) margin, following the ratio established by the Bombay High Court. Background and Alleged Bogus Purchases The appeal challenged a reassessment order for Assessment Year 2010-11, c...