Case Law Details
R R Carwell Pvt. Ltd. Vs DCIT (ITAT Delhi)
Disallowance of bogus purchases reduced to 2% when existence of some parties proved and payments were routed through bank
Facts- The assessee is engaged in the application/job-work of Auto Additives and Car care Products across various two-wheelers and four-wheelers authorized service centers. It filed its ROI on 25.09.2012 declaring income of Rs.58,04,170/-. The return was duly processed under section 143(1) determining the returned income.
During assessment proceedings, the assessee could not produce the principle officer/director of M/s White Collar Management Service Pvt. Ltd., the A.O. asked the assessee to explain as to why the amount of Rs.10,00,000/- received from M/s White Collar Management Service Pvt Ltd as an unsecured loan should not be treated as unaccounted/bogus and added back to its total income for the year under consideration.
The assessee has challenged the order of the CIT(A) confirming disallowance of Rs.1,05,98,837/- being 25% of the purchases amounting to Rs. 4,23,95,347/- by rejecting the books of accounts u/s 145(3) of the Act and directing the AO to restrict the disallowance to 20% in cases the parties are found to be in existence by Ward Inspector.
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