2016 (12) TMI 550 - AT - Income Tax

Trading addition - bogus purchases - CIT(A) restricting the trading addition to ₹ 7,85,442/- on bogus purchases as against the trading addition of ₹ 57,28,311/- on the basis of GP rate applied by the ld Assessing Officer @ 8.32% on total sale - Held that - The Coordinate Bench in the case of assessee for A.Y. 2008-09 2015 (4) TMI 533 - ITAT JAIPUR has decided this issue in the case of assessee by applying NP rate @ 15% on unverifiable purchases and had not found applicable average GP rate applied by the ld Assessing Officer. Thus, we do not find any reason to intervene in the order of the ld CIT(A). Accordingly, we confirm the order of the ld CIT(A). - Decided against revenue

Summary

Issues:
Appeal against order restricting trading addition on bogus purchases.

Analysis:
The appeal was filed by the revenue against the order passed by the C.I.T.(A)-2, Jaipur for A.Y. 2010-11, specifically challenging the direction to restrict trading addition. The Assessing Officer had made a trading addition of &8377; 57,28,311 based on a GP rate of 8.32% on total sales, rectifying a calculation mistake under Section 154. The assessee contended that the appeals against preceding year additions were pending, and the GP rate was correct. The C.I.T.(A) allowed the appeal, noting the disallowance on unverifiable purchases and the application of the average GP rate of the last five years. The ITAT, Jaipur Bench had previously disallowed 15% of unverifiable purchases in a similar case. The revenue appealed the decision, but the ITAT upheld the C.I.T.(A)'s order, citing the previous decision on NP rate on unverifiable purchases and not the average GP rate applied by the Assessing Officer. Consequently, the revenue's appeal was dismissed.

This judgment involved a dispute over the trading addition made by the Assessing Officer based on a GP rate and the subsequent direction by the C.I.T.(A) to restrict the addition. The Assessing Officer rectified a calculation mistake under Section 154, increasing the trading addition significantly. The C.I.T.(A) considered the disallowance on unverifiable purchases and the average GP rate of the last five years, leading to a different conclusion than the Assessing Officer. The ITAT relied on a previous decision regarding the NP rate on unverifiable purchases in a similar case and upheld the C.I.T.(A)'s order. The ITAT found no reason to intervene in the C.I.T.(A)'s decision, resulting in the dismissal of the revenue's appeal.