Kritika Jain Vs ITO (ITAT Delhi)
ITAT Partly Deletes Addition on Alleged Bogus Purchases – Profit Already Offered in Books, Double Taxation Not Justified
Assessee, engaged in lubricant & rubber trading, originally filed return declaring income of ₹20,52,910. The case was reopened based on Investigation Wing report alleging bogus purchases of ₹65,60,000 from Manjeet Singh (Gupta Trading Co.). AO applied 12.5% profit rate on the purchases and made addition of ₹8,20,000 u/s 69C, without rejecting books. CIT(A) upheld reopening and confirmed the addition.
Before Tribunal:
Assessee raised four issues:
- Invalid reopening,
- No notice u/s 143(2),
- Violation of natural justice,
- Incorrect addition of ₹8,20,000.
Tribunal’s Findings:
Reopening upheld
- Investigation report provided prima facie material.
- As per SC in Raymond Woollen Mills & Gujarat HC in Vasudev Fatandas Vaswani, AO only needs “reason to believe”, not conclusive proof.
- Hence, reopening valid.
Notice u/s 143(2) was issued
- Copy of notice dated 28.08.2023 was on record.
- Therefore, objection rejected.
On merits
- AO did not reject books of account.
- Purchases and corresponding sales were recorded in P&L.
- Profit element on such sales was already offered to tax.
- Taxing 12.5% again causes double taxation.
- During hearing, Tribunal asked why not tax 50% of profit element—Assessee agreed to ₹4,00,000.
FULL TEXT OF THE ORDER OF ITAT DELHI
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