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2017 (4) TMI 1269 - AT - Income TaxAddition u/s 69C - Bogus purchases - Held that - Making the entire bogus purchases as addition u/s 69C is no longer sustainable in law considering the the Bombay High Court Judgment in the case of Nikunj Eximp Enterpries P Ltd (2013 (1) TMI 88 - BOMBAY HIGH COURT) and Gujrath High Court Judgment in the case of CIT vs. Simit P Sheth 2013 (10) TMI 1028 - GUJARAT HIGH COURT wherein restricting the addition to GP rate of 12.50% is approved. Accordingly I order and direct the Assessing Officer to restrict the disallowance to only 12.50% of the sum of ₹ 1,930/-. Accordingly, grounds raised by the assessee are partly allowed.
Issues:
- Appellant challenging CIT (A) order regarding addition on account of 'bogus purchases' for the assessment year 2009-2010. Analysis: 1. The appellant raised seven grounds in the appeal, with the main issue being the correctness of the addition on account of 'bogus purchases' totaling ?1,930. Both the Assessing Officer (AO) and the CIT (A) treated the entire amount of ?1,930 as an addition under section 69C of the Act. 2. During the Tribunal proceedings, the counsel for the assessee proposed restricting the disallowance to a GP rate of 12.50% of the amount. It was argued that similar additions were made in subsequent years without such restrictions. 3. The Tribunal, after hearing both parties, concluded that treating the entire amount of 'bogus purchases' as an addition under section 69C was no longer legally sustainable. The Tribunal referred to judgments from the Bombay High Court and the Gujarat High Court, specifically the case of Nikunj Eximp Enterprises P Ltd and CIT vs. Simit P Sheth, respectively. These judgments supported restricting the addition to the GP rate of 12.50%. 4. Consequently, the Tribunal directed the Assessing Officer to limit the disallowance to 12.50% of the ?1,930 'bogus purchases'. The grounds raised by the assessee were partially allowed, and the appeal was partly allowed as a result. 5. The order was pronounced in the open court on 26th April 2017.
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