Case Law Details
PCIT Vs Ram Builders (Bombay High Court)
It was held that without purchase of the material, it was not possible for the appellant (Assessee) to complete the work allotted to them by a semi Government Authority. It was also held that the A.O. had never disputed or examined the aspect of contract receipts from BMC or the consumption report of the material used in the execution of works and further that since contract work carried out by the appellant was not doubted or disputed by the A.O, the A.O. could not have denied that purchases were not made and the material was not used in the execution of the contract works. It was also held that merely, because the suppliers did not appear before the A.O. or only five confirmation letters were furnished, it cannot not be concluded that purchases were not made by the assessee.
Accepting the statement of the assessee that the addition be restricted to only profit element on the purchases efected by it, the CIT(A), restricted the addition by estimating profit of 12.5% on the total purchases in question.
Tribunal dismissed the appeal as also the cross-objection filed by the assessee and upheld the order of learned CIT(A).
The Tribunal upheld the findings recorded by the learned CIT(A) on two grounds. Firstly, that the consumption report with regard to material purchases had never been controverted by the A.O and secondly that the completion certificate in regard to the contract works submitted by the assessee had been accepted by the A.O., in the light of which, it could not be said that the purchases were totally bogus and consequently ought not to be fully disallowed. The Tribunal also upheld the addition estimated at Rs.59,31,849/- based upon estimated profit at the rate of 12.5% on the total purchases in question.
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