ITAT Mumbai Upholds 4% Addition for Bogus Purchases

ACIT Vs Dhiraj Parbat Gothi (ITAT Mumbai)

Income Tax Appellate Tribunal (ITAT), Mumbai Bench, on May 30, 2025, dismissed an appeal filed by the revenue against Dhiraj Parbat Gothi. The appeal challenged the decision of the Commissioner of Income Tax (Appeals) [CIT(A)], who had reduced an addition for alleged bogus purchases from 12.5% to 4% of the total purchase amount of Rs. 3,33,69,047.

Background of the Case

The case pertains to Assessment Year 2007-08. The assessee had filed his original return of income on October 25, 2007. The case was subsequently reopened based on information from the Directorate General of Income Tax (Investigation), indicating that the assessee had obtained bogus purchase bills totaling Rs. 3,33,69,047 from various parties allegedly controlled by Mr. Pravin Kumar Jain. The listed parties included JPK Trading (I) Pvt. Ltd., Newplanet Trading Co. Pvt. Ltd., and Ostwal Trading (I) Pvt. Ltd.

The Assessing Officer (AO) sought details and explanations regarding these transactions. The assessee provided various documents, including copies of income tax returns, capital account/balance sheet, purchase bills, ledger accounts, bank statements showing payments, and a stock register. Crucially, the assessee also furnished an affidavit from Mr. Pravin Kumar Jain, retracting his earlier statement to the income tax authorities, claiming it was recorded under coercion. The assessee further provided MCA documents showing changes in the names of the three alleged supplier companies and asserted that Mr. Pravin Kumar Jain was not a director in these entities.