2019 (7) TMI 1568 - AT - Income Tax

Bogus purchases u/s 69C - HELD THAT - As decided in own case 2018 (10) TMI 1795 - ITAT AHMEDABAD in view of profits already declared on alleged bogus purchases in the vicinity of 7%, we are of the view that an estimated disallowance of 5% alleged bogus purchases over and above the prof its already declared would cover possible suppression in prof its and will balance the equity. Such estimation would also be in tune with the judgment of Hon ble Gujarat High Court in Gujarat Ambuja Exports 2013 (10) TMI 933 - GUJARAT HIGH COURT

Summary

Issues Involved:
1. Rejection of books of accounts.
2. Disallowance on account of alleged bogus purchases.

Issue 1: Rejection of books of accounts:
The appeals were filed by the Assessee against the orders of the Commissioner of Income Tax (Appeals) relating to different assessment years. The Assessee maintained that the facts in both appeals were identical except for the assessment year and the amounts involved. The Assessee appealed for the rejection of the books of accounts to be quashed. The Tribunal noted that the Assessee did not present any arguments on the rejection of books of accounts, leading to the rejection of this ground of appeal.

Issue 2: Disallowance on account of alleged bogus purchases:
The Assessee, engaged in the business of gift articles, was found to have made bogus purchases based on information from the VAT/Sales Tax Department. The Assessing Officer disallowed these purchases and added the amount to the Assessee's total income. The Assessee contended that a previous Tribunal decision in a similar case favored them, and prayed for a similar finding. The Tribunal analyzed the case, considering the possibility of manipulation in purchase bills and the pricing of goods. Referring to relevant judicial pronouncements, the Tribunal directed the Assessing Officer to restrict the estimated disallowance on account of alleged bogus purchases. The Tribunal partly allowed the appeal based on the findings in the previous case.

Final Outcome:
Both appeals of the Assessee were partly allowed by the Tribunal, with the rejection of books of accounts ground dismissed due to lack of arguments presented. The Tribunal directed the Assessing Officer to restrict the estimated disallowance on account of alleged bogus purchases, following a similar decision in a previous case. The appeals were disposed of by way of a consolidated order, providing relief to the Assessee in both cases.