Creative Thinks Media Pvt. Ltd. Vs Assessing Officer (ITAT Delhi)
Once AO Holds Entire Purchases Bogus, He Cannot Tax Only 25%: ITAT Upholds Section 263 Revision for 100% Addition u/s 69C at Section 115BBE Rate
Summary: The Delhi Bench of the Income Tax Appellate Tribunal has upheld revisionary proceedings u/s 263 where the AO, despite recording a finding that purchases of ₹28.18 crore were entirely non-genuine, added only 25% of such purchases and taxed the addition at the normal rate.
Relying principally upon N.K. Proteins Ltd., the Tribunal held that the issue was not debatable and sustained the PCIT’s direction to add the entire amount as unexplained expenditure u/s 69C and apply the special rate prescribed u/s 115BBE.
AO Adds 25% of Alleged Bogus Purchases
The assessee had made purchases aggregating to ₹28,18,00,184 during FY 2020-21. During assessment proceedings, the AO called for documentary evidence to verify the purchases. According to the assessment findings, the assessee failed to furnish the basic documents necessary to establish their genuineness.
The AO concluded that the purchases were non-genuine. However, instead of disallowing the entire amount, he estimated the addition at 25% of the purchases, amounting to ₹7,04,50,046. This addition was taxed at the normal corporate rate.
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