DCIT Vs B. Chokshi Chem Pvt. Ltd. (ITAT Ahmedabad)
Bogus Sale Addition Falls Flat- No Bogus Purchases, Hence No Bogus Sales- Tribunal deletes Rs. 4.67 Crore Addition
Ahmedabad Tribunal dismissed four appeals of Revenue, upholding deletion of additions made on account of alleged bogus sales.
The case arose from a search on Gujarat Polysol Chemicals Ltd. (GPCL) where Investigation Wing alleged bogus purchases. Since GPCL had shown purchases from Assessee, AO reopened assessment & treated sales of Rs.4.67 crores made by Assessee to GPCL as bogus.
CIT(A) deleted addition noting that in GPCL’s own case, similar additions on alleged bogus purchases were already deleted by Tribunal, which held that purchases could not be termed bogus & at best only profit element could be taxed.
Tribunal observed that once purchases by GPCL were not held bogus, there was no basis to hold corresponding sales by Assessee as bogus. Further, no finding was recorded that Assessee indulged in bogus purchases or that stock position was disturbed. Since the very foundation of addition had ceased to exist, CIT(A)’s deletion was justified.
Tribunal applied same reasoning for A.Ys. 2019-20 to 2021-22 where identical additions were made. Accordingly, all four appeals of Revenue were dismissed.
